Should you select Married Filing Jointly or Married Filing Separately when marrying a Costa Rican? It has become common for US Persons to find love abroad. You’ll often hear of an American moving to Costa Rica and marrying a young Tico or Tica.
A U.S. citizen or permanent resident needs to consider a few tax issues when marrying a non-American. A U.S. Person with a certain level of income will usually have to file a tax return every year, even if they live abroad. An unmarried person will usually file under the “single” status.
A married person who lives with their spouse cannot use that status any longer. Many people think that if you get married outside of the United States, the IRS doesn’t consider it a real marriage, but that is not correct.
Once you are married, you will need to select either “Married Filing Jointly” or “Married Filing Separately” on your tax return.
Depending on the couple’s income, joint filing is usually preferable for couples where both partners are U.S. citizens. The IRS has expressed a policy of preferring joint filing over single filing. There are limits to various credits and deductions for married separate filers. One of the major drawbacks to Married Filing Separately is that the amount of tax on your U.S. Social Security payments will usually go way up.
While it is often beneficial for married couples to file jointly when they are both U.S. Citizens, there is another thing to consider when one of the partners is not.
The U.S. cannot tax a non-U.S. person on income that is earned outside of the United States – usually. The government gains the authority to tax such a person when they file jointly with a U.S. citizen or permanent resident. By filing jointly with a U.S. taxpayer, the non-citizen spouse is submitting themselves to the taxing authority of the United States.
A non-citizen spouse
If the non-citizen spouse has income, the tax bill can be higher on a joint return than the U.S. citizen spouse would pay on their own income. Even with the drawbacks of the Married Filing Separately status. A licensed tax preparer, like the professionals at U.S. Tax and Accounting in Rohrmoser, can help you determine which is the best filing status to use for your particular need.
If you have a non-citizen spouse that cannot get a Social Security number, you will need to apply for an Individual Taxpayer Identification Number, or ITIN, using form W-7. This is a short form, but the IRS will reject it for any small error, and it often takes months to collect the necessary documents to re-apply. A qualified professional can help you apply for the ITIN for your spouse.
U.S. Tax International
Article by Randall Lindner for the Easy Times
Randall Lindner founded U.S. Tax International in San Jose, Costa Rica 18 years ago. Prior to that, Mr. Lindner worked for almost twenty years in Florida as a tax accountant. Mr. Lindner is an Enrolled Agent, licensed directly by the United States Treasury Department to represent clients before the IRS.
U.S. Tax International is a company with offices in San José Costa Rica and Palm Beach County Florida and specializes in helping U.S. Citizens living overseas comply with their IRS filing obligations. At U.S. Tax International. They will help you file your annual Form 1040, Report of Foreign Bank and Financial Accounts (FBAR) Form TDF 9022.1, Information Return of U.S. Persons With Respect to Certain Foreign Corporations Form 5471, and Statement of Foreign Financial Assets Form 8938.
U.S. Tax International will help you determine whether you are eligible for the Foreign Earned Income Exclusion on Form 2555, the Foreign Tax Credit on Form 1116, or the Earned Income Tax Credit. They will work to make sure you have the lowest tax possible and comply with all your legal obligations.
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