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Who can file Joint Tax Returns in the United States?

Thursday August 10, 2017

Generally, married taxpayers may elect to file a joint return or file as married persons filing separately. In most cases, it is more beneficial for married taxpayers to file a joint return.

Spouses may file a joint return even though one spouse has no income or deductions, only if their tax years begin on the same date, they are not separated under a decree of divorce and neither is a non-resident alien at any time during the year.

Marital status for federal tax purposes depends on state law. Taxpayers married in compliance with the laws of one state remain married regardless of where they reside. A domestic partnership, civil union, or other similar formal relationship will not be treated as a marriage for federal tax purposes if the relationship is not called a “marriage” under state or foreign law.

A U.S. citizen or a resident married to a non-resident of US generally uses the status Married Filing Separately. A joint tax return can only be filed when both spouses are U.S. taxpayers (citizens or resident aliens).

Section 6013(g) Election:

A U.S. citizen or resident and his or her non-resident alien spouse, however, can elect under section 6013(g) to file a joint return if they agree to be taxed on their worldwide income and supply all necessary books and records and other information pertinent to the determination of tax liability.

This special one-time election to file a joint return is available in the year in which a non-resident alien spouse becomes a resident. The following are the requirements for the election:

  1. The two people must be married;
  2. Neither spouse made (and later revoked) this election before; and
  3. A statement (signed by both spouses) is attached to the joint return for the first year that the election is to be effective.

The statement must be filed with the tax return and contain a declaration that the election is being made and that the Regs. §1.6013-6(a) (1) are satisfied for the tax year for which the election is being made. It should have the name, address, and taxpayer identification number of each spouse and be signed by both the spouses.

Before making this election, taxpayer should understand the consequences and estimate the tax savings. Future events should also be considered before making the decision.

In situations where both spouses are non-resident aliens, and one spouse has US source employment income, it may be possible to compute US tax as though married filing jointly, using a little known provision of the Canada-US Income Tax Treaty.  This would be useful if the US tax otherwise payable is more than the amount that can be claimed as a foreign tax credit on the Canadian tax return.

If you are concerned about this decision, please contact S+C Partners LLP for assistance.