Question

FACTS:

Sheldon and Victoria were married last year and live in England.

• Sheldon is a U.S. citizen and has a valid Social Security number. Victoria is a citizen of England.

• During the interview, Victoria mentions that she has never filed a joint return with Sheldon. She asks the volunteer what is required to file a joint return with Sheldon. Based on the information provided, Victoria decides she does not want to be treated as a resident alien for U.S. tax filing purposes this year.

• Sheldon worked for a U.S.-based company and earned $55,000. Victoria worked part-time and earned the equivalent of $12,000 in U.S. dollars.

• Sheldon and Victoria’s daughter, Riley, lives with them. Riley is eight months old, a U.S. citizen, and has a valid Social Security number.

• Victoria has another child from a previous marriage; Adam is five years old and is a citizen of England. Sheldon has not adopted Adam.

• Sheldon and Victoria provided all the financial support for Riley and Adam.

1. Victoria does not want to elect to file a joint return with Sheldon. What is the most advantageous filing status for Sheldon?

a. Married Filing Separately

b. Single

c. Head of Household

d. Qualifying Widower

2. On his U.S. tax return, how should Sheldon treat Victoria’s income?

a. Because Victoria did not choose to file a joint return, Sheldon should report her income as his own on a separate return.

b. Victoria’s income is not included on the return because she does not choose to be treated as a resident alien.

c. Because their combined income is less than the foreign earned income exclusion limit, Sheldon doesn’t need to file a return.

d. Victoria’s worldwide income must be reported on Sheldon’s return.

3. In the future, if Victoria and Sheldon choose to file Married Filing Jointly and treat Victoria as a resident alien for tax purposes, this election will continue each year unless suspended or ended.

a. True

b. False

Answer 1

1. Answer is c.

   Explanation

When can a citizen or resident alien, who lives with a nonresident alien spouse, file as Head of Household?

There is an exception that allows U.S. citizens and resident aliens who have a nonresident alien spouse to file as Head of Household. All of the following requirements must be met:

• The taxpayer is a U.S. citizen, or resident alien for the entire year.

• The nonresident alien spouse chooses not to file a joint return.

• The taxpayer meets the other requirements for this filing status.

• The spouse is not a qualifying person for head of household purposes. The taxpayer must have a qualifying person in order to be eligible for this filing status

2

Answer is A.

You will get the exemption for your spouse, but all your spouse's worldwide income will be taxed by the United States. Treat your spouse as a nonresident alien for tax purposes. If you choose this option, you cannot file a joint tax return. You must file with a status of "married filing separately."

3.

Answer is A.

Explanation

Married filing jointly election

If you are a dual-status alien, and are married to a U.S. citizen or resident alien at the end of the year, you may make an election under § 6013(h) to file as married filing jointly. This election will treat you as a resident alien the entire year, so you will not be subject to the restrictions on dual-status taxpayers as outlined above. However, this election will also make your worldwide income subject to U.S. reporting for the entire tax year, as well as FBAR and FATCA reporting requirements for the entire year.

You may make this election if all of the following apply:

• You are a nonresident alien at the beginning of the year

• You are a resident alien or U.S. citizen at the end of the year

• You are married to a U.S. citizen or resident alien at the end of the year

• Your spouse joins you in making the choice.

• When you make this election, the following apply:

  You will be treated as a resident alien for the entire tax year and taxed on worldwide income

  You must file a joint return for the year you make this choice

  Neither you nor your spouse can make this choice for any later tax year, even if you are separated, divorced or remarried.

  Note that even if you are treated as a resident alien for the time you were a nonresident alien, you may be able to exclude foreign earned income for this portion of the year using the foreign earned income exclusion.

  In order to make this election, a statement should be attached to your return signed by both you and your spouse.

  If you are a nonresident alien and married to a U.S. citizen or resident alien for all or part of the tax year, and you do not choose to make the election to file jointly, you must use married filing separate as your filing status. You cannot file as married filing jointly or as single.