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Married to a Non-Resident Alien? You May Qualify for Tax Benefits

May 11, 2021

If you’re married to a nonresident alien and you have a qualifying dependent you might be able to file as Head of Household. See if you can benefit.

Did you know that if you are married to a nonresident alien, your dependent is a U.S. person, and your tax home is abroad you may file as a Head of Household? Here is why this tax filing status position may save you some money.

You may be asking: “Is my spouse a nonresident alien?”

A nonresident alien is a person that is not a U.S. citizen or green card holder, does not meet the substantial presence test, or has not made an election to be treated as a resident alien. As a U.S. citizen or green card holder abroad, being married to a nonresident alien offers the advantage that you are considered unmarried for head of household purposes. This may qualify you to use the head of household tax rates and increased standard deduction.

As a nonresident alien your spouse is not a qualifying person for head of household purposes. Here is how you can qualify:

  1. You paid more than half the cost of keeping up a home that was the principal residence for the whole year for your mother or father whom you can claim as a dependent (your parent does not have to have lived with you); or
  2. You paid more than half the cost of keeping up the home in which you lived and one of the following also lived for more than half the year:
    -Your child, grandchild, stepchild, foster child, or adopted child whom you can claim as a dependent.
    -A relative listed whom you can claim as a dependent.
  3. The potential qualifying dependent is either a U.S. citizen or green card holder with a Social Security number.
    -If they don’t have a Social Security number one should be applied for at the nearest U.S. embassy.
  4. Your tax home must be abroad.

Okay, you satisfy all the requirements, why is this even worth it?

Since you are married, the other two filing status option are married filing jointly or married filing separately. If you file as head of household, you will typically save money by falling into a more beneficial tax bracket and qualifying for a greater standard deduction. On top of that, depending on your income levels you could potentially qualify for the full child tax credit which alternatively would be reduced if you had filed as married filing separately.

The other alternative is filing as married filing jointly by making an election to treat your nonresident alien spouse as a tax resident for tax purposes. Keep in mind that if you make this election you must include the worldwide income of both yourself and your spouse on your joint income tax return. In addition, your spouse will need to disclose their foreign assets if they rise to the level of reporting.

There is no one size fits all solution, thus, you ought to contemplate all the factors and your personal situation before deciding. Our International Tax Services team at KLR, specializes in the analysis and minimization of worldwide income tax obligations. Contact us for assistance.

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