Foreign spouse

[henry999]

What is the name of your state? (Wisconsin)

I am a US citizen, 61 years old, who has lived abroad for many years. Ten years ago I got married to a citizen of the country where I live. Since then I have not worked and, having no income, have not filed a 1040.

Now I want to start taking an annual distribution from the IRA that I built up during my working years. (The account is in my bank in Wisconsin.) I understand that this is taxable income and I will once again need to file a tax return. The problem comes with this instruction on the 1040:

> Nonresident Alien Spouse

> If your spouse is a nonresident alien and you file
> a joint or separate return, your spouse must have
> either an SSN or an ITIN.

My husband has never lived or worked in the US and it is unlikely that he ever will. He can see no reason why he should be catalogued in the American IRS computer system and he consequently refuses to get an ITIN.

So how do I file?

Thanks in advance.

Betty L.

 

[LdiJ]

What is the name of your state? (Wisconsin)

I am a US citizen, 61 years old, who has lived abroad for many years. Ten years ago I got married to a citizen of the country where I live. Since then I have not worked and, having no income, have not filed a 1040.

Now I want to start taking an annual distribution from the IRA that I built up during my working years. (The account is in my bank in Wisconsin.) I understand that this is taxable income and I will once again need to file a tax return. The problem comes with this instruction on the 1040:

> Nonresident Alien Spouse

> If your spouse is a nonresident alien and you file
> a joint or separate return, your spouse must have
> either an SSN or an ITIN.

My husband has never lived or worked in the US and it is unlikely that he ever will. He can see no reason why he should be catalogued in the American IRS computer system and he consequently refuses to get an ITIN.

So how do I file?

Thanks in advance.

Betty L.

You file a return by yourself, and file "married filing separately".

 

[BelizeBreeze]

and just as an aside, although you may not have had income for the last 10 years, you were still required to file a return.

 

[henry999]

You file a return by yourself, and file "married filing separately".

Sorry, maybe I should have quoted the IRS regulation in CAPITAL LETTERS to make it clearer. It says, as I noted in my original message, that

[even] IF...YOU FILE A ... SEPARATE RETURN, YOUR SPOUSE MUST HAVE...AN ITIN.

???

Betty

 

[henry999]

and just as an aside, although you may not have had income for the last 10 years, you were still required to file a return.

Why is that? The instructions say that if you have income of less than, what is it? $3200 or something?, you do not need to file a return.

Betty

 

[LdiJ]

and just as an aside, although you may not have had income for the last 10 years, you were still required to file a return.

BB...sorry but that is absolutely incorrect.

 

[LdiJ]

Sorry, maybe I should have quoted the IRS regulation in CAPITAL LETTERS to make it clearer. It says, as I noted in my original message, that

[even] IF...YOU FILE A ... SEPARATE RETURN, YOUR SPOUSE MUST HAVE...AN ITIN.

???

Betty

You had to have misread.... or your source is incorrect. Your spouse is not required to have an ITIN number. You will not be able to file electronically if your spouse does not have an ITIN number, however you can file a paper return.

 

[henry999]

You had to have misread.... or your source is incorrect.

The source may well be incorrect, but it could be tough to argue with them -- since the source is www.irs.gov, exactly as I quoted in the first message. Hard to misread that.

Betty

 

[You Are Guilty]

The source may well be incorrect, but it could be tough to argue with them -- since the source is www.irs.gov, exactly as I quoted in the first message. Hard to misread that.

Betty

Do you mean the page that starts with this:

Election to File Joint Return

If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other is a nonresident alien, you can choose to treat the nonresident as a U.S. resident. This includes situations in which one of you is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other is a nonresident alien at the end of the year.

If you make this choice, the following two rules apply:

* You and your spouse are treated, for income tax purposes, as residents for all tax years that the choice is in effect
* You must file a joint income tax return for the year you make the choice

http://www.irs.gov/businesses/small/international/article/0,,id=96734,00.html
?

 

[henry999]

Do you mean the page that starts with this:

No, this has nothing to do with treating a non-resident as resident. This has to do with a non-resident non-citizen who has zero US tax liability. But because I need to file, and he is my husband, the rules as quoted seem to insist that he have a US taxpayer number -- either SSN or ITIN.

Betty

 

[LdiJ]

No, this has nothing to do with treating a non-resident as resident. This has to do with a non-resident non-citizen who has zero US tax liability. But because I need to file, and he is my husband, the rules as quoted seem to insist that he have a US taxpayer number -- either SSN or ITIN.

Betty

Believe it or not, the IRS instructions and publications often have incorrect information in them. If your spouse was living in the US I would agree that he would need an ITIN number. However he is neither a citizen nor resident (either formally or under the substantial presence test) of the US, therefore he is not subject to US law.

He does not have to get an ITIN number.

Simply file a paper return. File married filing separately but leave him off of it entirely.

There is nothing that the IRS can do to you over this. Its not like it makes a difference in your tax rate if your husband is identified.

In fact, your husband can't even GET an ITIN number unless you are living in Canada or Mexico. You have to either be a legal resident or pass the substantial presence test, or be located in Canada or Mexico to get an ITIN number.

I have lots of clients whose spouses are not US citizens or residents and don't live here. They WANT to get ITIN numbers for their spouses so that they can file joint returns, but are unable to do so.

 

[henry999]

Believe it or not, the IRS instructions and publications often have incorrect information in them.
...
Simply file a paper return. File married filing separately but leave him off of it entirely.

Thank you.

Betty

 

[abezon]

Well, there's obviously much confusion on these issues.

1. If you a US citizen are married to a nonresident alien, your filing status options include:
* head of household if you otherwise qualify
* married filing jointly if spouse elects to file jointly & you are both willing to report worldwide income. Your spouse must get an ITIN to do this.
* married filing separately, claiming only your personal exemption amount (write NRA in the spouse's SSN box)
* married filing separately & claiming a personal exemption amount for your spouse, if your spouse had no US source gross income AND you get an ITIN for your spouse.

If you don't need the extra personal exemption you'd get by having an ITIN for your spouse, you don't need to worry about getting one. The standard deduction for MFS is $5000-something & personal exemptions are about $3300 for 2006, so the first $8300 or so of your IRA distribution is tax-free anyway. Deduction & exemption amounts are both indexed for inflation. I didn't take the time to look up the 2006 numbers -- you can do that on the IRS web site.

If you will have a US tax liability but can claim it all on your foreign return & get a full forieign tax credit, you don't need to worry about the ITIN. You're just saving money on the US return only to pay it to your residential country on that return.

An ITIN is advantageous if you will owe taxes to the US (say $600) AND won't get the full value of your foreign tax credit (say only $400).

2. Residency Requirements: LdiJ, I don't know why your clients can't get ITINs, but mine get them all the time. An ITIN is available to anyone who has to file a US tax return or who will be claimed on a US tax return. The biggest problem with getting ITINs is that the applicant has to send in notarized copies of identification documents (passport), and a foreign notary public cannot be used. In other words, the applicant has to either get the documents copied/notarized on a visit to the US or must make an appointment, schlep down to the nearest US consulate/embassy, get past the guards who won't have your name on thier list, wait in line, & have a consular employee notarize the documents. Call ahead to make sure the only US notary in Uganda is not on vacation!

The requirement for an ITIN applicant to be a resident of Canada or Mexico applies to dependency exemptions only, not to the personal exemption for a spouse. A US citizen can always claim a personal exemption for an NRA spouse who has no US source gross income. It's in the tax code at sections 151 & 872. In contrast, a nonresident alien filing a 1040NR can only claim a personal exemption for a nonresident alien spouse if they are both residents of Canada, Mexico, Korea, or Japan.


So, the first issue is whether getting an ITIN for your spouse would benefit your bottom line. The second issue is meeting the identification requirements for Form W-7.

You didn't specify which country you're in, but you should check to see if there is a treaty provision that helps you. Specifically, check to see which country gets to tax any social security payments. If your filing status is married filing separately, your social security is taxable on the US return unless specifically exempted by treaty. Filing jointly may be significantly better simply because you don't have taxable social security on your 1040.

 

[henry999]

Well, there's obviously much confusion on these issues.

1. If you a US citizen are married to a nonresident alien, your filing status options include:
...
* married filing separately, claiming only your personal exemption amount (write NRA in the spouse's SSN box)

Confusion, indeed. Especially since

(1) As I cited in my original post, the IRS says quite clearly that if you file with married status -- either jointly or separately -- the spouse's SSN (or ITIN) must be provided; and

(2) The instructions for the ITIN include the following:

Who needs an ITIN?
...
Examples of individuals who need ITINs include:
...
Dependent or spouse of a U.S. citizen/resident alien

[and then this]

How do I know if I need an ITIN?
...
IRS processes returns showing SSNs or ITINs in the blanks where tax forms request SSNs.
IRS no longer accepts, and will not process, forms showing "SSA205c," "applied for," "NRA," blanks, etc.


again, it seems quite clear:

IRS no longer accepts, and will not process, forms showing ... "NRA," ...


Betty

 

[tranquility]

I haven't answered the question, as I don't know the answer. When I first read it, I was going to correct the other posters because I thought, of course you need a number for the spouse on a married filing seperately return. My tax software comes up with a critical error if one isn't there and I know you cannot e-file the return. And, this is not listed as a reason to paper file return. (Some e-file errors are only that formatting for the computer records and paper returns need to be filed. Others are actual errors that require correction.)

So, I figured I'll take a quick look and find the code and point out the requirement, wipe my hand on my pants and move on. I couldn't find the requirement.

The 1040 page certainly requires it (per the form), the instructions and some publications mention it. While there are many times I look to the instructions for an answer, as LdiJ states--it is not the law. After doing a short look at the cases, I discovered I would need to spend a lot more time if I wanted to give a definitive result.

However, since I write in the interstices of time between projects, anything that does not teach me something in the looking up is not something that will be done for free. And this question doesn't interest me enough to spend the time researching.

NOT AS ADVICE, but only as a pull-something-out-of-my-neither-region WAG for something I would do myself but would never recommed to another, submit the return with the name listed and with "none" written in the space for the number. Don't claim any deduction for the spouse. What are they going to do? They will probably send a letter requesting a number. You can then send a letter describing the facts. (Or, you could put a statement on the return describing the facts.) I don't see it listed under penalties. The only thing they could do is deny the return was filed. If they do that at least they would have to point to the legal reason and you could make your choice from there. Let's face it, if a legal return requires the number of a spouse when you are married filing seperately, and your spouse refuses to get one, there is no way to make it right. I'd make the filing and see what they say.