Who Can File a Joint Tax ReturnJuly 7, 2017 - Phil HodgenFriday Edition
U.S. Citizen Wants to File a Joint Tax Return
U.S. citizens living abroad will often (gasp) marry someone who is not a citizen of the United States. The married couple lives happily outside the United States, so the noncitizen spouse is not a resident of the United States in the eyes of the IRS.
Everything is fine until tax return season. The U.S. citizen looks at the “filing status” part of Form 1040, and silently wishes for that “Married Filing Jointly” status. (Filing a joint tax return with your spouse usually means that you pay less tax).
Who Can File Joint Tax Returns
A U.S. citizen married to a noncitizen/nonresident is forced to use the status Married Filing Separately. A joint tax return can only be filed when both spouses are U.S. taxpayers (citizens or resident aliens).1
How to Opt In: the Section 6013(g) Election
The nonresident/noncitizen spouse must therefore become a “resident alien” (as defined in the Internal Revenue Code) in order to qualify the U.S. citizen spouse for filing a joint tax return.
This can be done with a special election.2
Here are the requirements:
- The two people must be married;
- Neither spouse made (and later revoked) this election before; and
- A statement (signed by both spouses) is attached to the joint tax return for the first year that the election is to be effective.
The first requirement is marriage: the two people must be husband and wife.3
As of December 31
Marital status is determined on December 31.4
“Married” includes, of course, includes couples who have the correct governmental status as such:
For federal tax purposes, the terms spouse, husband, and wife mean an individual lawfully married to another individual. The term husband and wife means two individuals lawfully married to each other.
Common Law Marriage
The IRS respects common law marriages: if, under the laws of the country you live in, you are considered to be married, then you are considered to be married for U.S. tax purposes as well:
Two individuals who enter into a relationship denominated as marriage under the laws of a foreign jurisdiction are recognized as married for federal tax purposes if the relationship would be recognized as marriage under the laws of at least one state, possession, or territory of the United States, regardless of domicile.6
If you can point to at least one State that has common law marriage rules that would make you married in that State, then the IRS will respect your marital status for Federal tax purposes.
Not If You’re Legally Separated
If the couple is married but legally separated, they are not eligible to file a joint tax return using this election procedure. This requires an official ruling from a court; the election is not valid:
In the case of the legal separation of the couple under a decree of divorce or of separate maintenance, as of the beginning of the taxable year in which such legal separation occurs.7
No Prior Election by Either Spouse
The election for a nonresident alien to be taxed as a U.S. resident alien is a “once in a lifetime” election:
If any election under this subsection for any two individuals is terminated under paragraph (4) or (5) for any taxable year, such two individuals shall be ineligible to make an election under this subsection for any subsequent taxable year.8
Is the “once in a lifetime” barrier applicable to second marriages? Or does it just bar this couple from making a second election? In other words, is the phrase “such two individuals”:
- Conjunctive–only these two people, acting together, are barred from making another Section 6013(g) election; or
- Disjunctive–each of these two individuals, separately, are forever barred from making a second Setion 6013(g) election with a new spouse.
The correct interpretation is that each spouse is barred from making a future election in the event of remarriage.
A husband and wife may not make an election if an election previously made under this section by either spouse has been terminated under paragraph (b) of this section.9
The rule can cause havoc for an individual who remarries:
W is a U.S. citizen, married to H1, a nonresident alien. Together, they make the election for H1 to be treated as a resident alien for U.S. income tax purposes, and they happily file joint tax returns for many years.
H1 dies. This causes the election to be terminated.10
W remarries. Her new spouse, H2, is a nonresident alien.
W and H2 cannot make the election to file a joint U.S. income tax return, because W alone previously made the election and had that election terminated because of the death of H1, her previous spouse.
The election is made by attaching a statement to an income tax return. There is no particular form that has been published.
What the Statement Says
The statement must contain the following:11
- A declaration that the election is being made.
- A declaration that the requirements of Regs. §1.6013-6(a)(1) are satisfied for the tax year for which the election is being made.
- The name, address, and taxpayer identification number of each spouse.
- The signature of both spouses.
How to File the Statement
The statement is attached to a joint tax return.12
When to File the Statement
The statement (attached to a joint tax return) can be filed late. If you are still eligible to claim a refund, you can make the election:
The election must be made before the expiration of the period prescribed by section 6511(a) (or section 6511(c) if the period is extended by agreement) for making a claim for credit or refund.13
There is a special rule where the IRS has issued a Statutory Notice of Deficiency:
- You cannot make the election if the IRS issued the Statutory Notice of Deficiency and you have petitioned the Tax Court.14
- You can make the election if you did not previously file a separate return, and the IRS prepared your tax return for you (a “Substitution for Return” under IRC §6020(b)).15
Here is a sample statement for you to copy. Type this on a plain piece of paper and attach it to the joint income tax return you are filing.
Election Under IRC §6013(g)
Each of the undersigned declare:
- That they hereby make an election under IRC §6013(g).
- The requirements of Regs. §1.6013-6(a)(1) are satisfied.
- (Spouse1) is a U.S. citizen.
- (Spouse1)’s taxpayer identification number is (insert Social Security Number).
- (Spouse1)’s address is (insert address).
- (Spouse2) is a nonresident alien, as defined by IRC §7701(b)(1)(B).
- (Spouse2)’s taxpayer identification number is (insert Individual Taxpayer Identification Number).16
- (Spouse2)’s address is (insert address).
(Signature and date by Spouse1)
(Signature and date by Spouse2)
That’s a quick review of making the Section 6013(g) election. Before you make the election, be sure you want to do it. Understand the effect of the election, and know that you are rolling your “once in a lifetime” dice.
Before making the election, you should make sure that you understand the consequences, and (just as important) you should calculate the tax savings you expect to achieve by having the nonresident alien spouse elect U.S. taxpayer status. It may be less than you think, and you may hit future events in your lives where the election actually harms you economically.
- IRC §6013(a)(1). ↩
- IRC §6013(g), Regs. §1.6013-6. ↩
- IRC §6013(g)(2), Regs. §1.6013-6(a)(1). ↩
- Regs. §1.6013-4(a)(1). ↩
- Regs. §301.7701-18(a). ↩
- Regs. §301.7701-18(b)(2); see also the Preamble to T.D. 9785, which discusses the intentions behind this Regulation. ↩
- IRC §6013(g)(4)(C). ↩
- IRC §6013(g)(6). ↩
- Regs. §1.6013-6(a)(1), flush language. ↩
- IRC §6013(g)(4)(B). ↩
- Regs. §1.6013-6(a)(4)(ii). ↩
- Regs. §1.6013-6(a)(4)(i). ↩
- Regs. §1.6013-6(a)(4)(i). ↩
- IRC §6013(b)(2)(B); Olson v. Commissioner, T.C. Memo. 1987-543, Kitcher v. Commissioner, T.C. Memo 1986-41, Mazanek v. Commissioner, T.C. Memo 1984-633. ↩
- Millsap v. Commissioner, 91 T.C. 926 (1988); Phillips v. Commissioner, 851 F.2d 1492 (D.C. Cir. 1988). ↩
- If the nonresident alien spouse does not have a U.S. taxpayer identification number, it will be necessary to apply for one. Fill in and attach Form W-7 to the tax return you are filing, and declare on this line: “(Spouse2) had no previous filing obligation for U.S. tax purposes and therefore does not have a taxpayer identification number. (Spouse2) has attached Form W-7 to apply for issuance of an Individual Taxpayer Identification Number.” ↩