Election to Treat Non-Resident Alien Spouse as U.S. Resident
Generally, a U.S. citizen or U.S. resident who is married to a nonresident alien must file their taxes as Married Filing Separately. However, a person who is a nonresident alien at the end of his taxable year, and who is married to a U.S. citizen or U.S. resident can be treated as a U.S. resident for income tax purposes if the spouses so elect (Code Sec. 6013(g)(1)).
In so doing, both spouses must agree to subject their worldwide income for the taxable year to U.S. taxation. (Code Sec. 6013(g); Code Sec. 6013(h))
Both parties must make the election. One party must have been, at the close of the taxable year for which the election was made, a nonresident alien individual married to a citizen or resident of the United States (Code Sec. 6013(g)(2)). To qualify for the election, the U.S. resident or U.S. citizen spouse needs to be a U.S. resident or U.S. citizen only at the close of the taxable year (Reg § 1.6013-6(a)(1)).
How to Make the Choice
Attach a statement, signed by both spouses, to the joint return for the first tax year for which the choice applies. It should contain the following information:
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A declaration that one spouse was a nonresident alien and the other spouse a U.S. citizen or resident alien on the last day of the tax year, and
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That the nonresident alien spouse chooses to be treated as a U.S. resident for the entire tax year.
Provide the name, address, and identification number of each spouse. (If one spouse is deceased, include the nameand address of the person making the choice for the deceased spouse.) Generally, this will require obtaining an ITIN for the nonresident spouse. (Reference Pub 519)
Once made, and as long as one of the spouses is a U.S. citizen or resident, the election applies not just for the year for which it is made but for all future years until it is terminated. If the election is terminated, neither spouse is eligible to make the election for any subsequent tax year. (Code Sec 6013(g)(6))
Terminating the Election
The election terminates at the earliest of any of the following events:
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Revocation by taxpayer or spouse - Either spouse may revoke the election by filing a statement of revocation by the due date for filing the tax return for the tax year.
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Death – Death of either spouse terminates the election beginning with the first tax year following the year the spouse died. However, if the U.S. citizen or resident spouse is the surviving spouse and meets the requirements for the qualified widow(er) status, the election continues for two years following the death of the nonresident spouse.
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Legal separation - If the couple legally separates under a decree of divorce or of separate maintenance, the election terminates as of the beginning of the taxable year in which the legal separation occurs.
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IRS action – The IRS may terminate the election for any tax year for which it determines that either spouse has failed to keep or provide sufficient books, records, and other information with which to determine tax liability. (Reg. §1.6013-6(b)(4))
Other Issues
NIIT - Higher income taxpayers with investment income are subject to a 3.8% surtax on net investment income). However, this tax does not apply to nonresident aliens. Therefore, when weighing the pros and cons of making the election to treat a nonresident alien spouse as a U.S. resident, the effect of the 3.8% tax on the couple’s total tax picture must be considered.
ITIN – If the nonresident spouse does not have and isn’t eligible for an SSN, he or she will need an ITIN if the election to file a joint return is made. An ITIN for the nonresident spouse is not needed if the resident spouse files MFS and the nonresident spouse isn’t filing a return. Page 13 of the 2024 Form 1040 instructions indicates that where filing MFS and a spouse is not otherwise required to have an ITIN or SSN, enter “NRA” in the space on the 1040 for the SSN/ITIN.
FBAR – There may also be an FBAR filing requirement.