Should I claim my spouse as a dependent on my taxes?

By Alex Oware on 06/24/2015 10:00 PM

Question: We filed MFJ but our return was rejected and I found out my wife’s number is an ITIN

·         Do I leave it MFJ and take out the ITIN?

·         Can I file as head of household (we have a child)?

·          My wife had no income; can I claim her as dependent?

 

Answer:

1.      You need to review the reject code; it may be an incorrect birthdate, or even an error in the name or SSN not matching IRS records. Returns with an ITIN reject for the same reasons as returns with an SSN. IRS don't reject because it is an ITIN.

 

2.      Head of Household may be an option. But there are some very complicated rules involved. HOH is possible, in some cases, when your spouse is a nonresident alien, even if you’re living together. But the you cannot claim EIC.

 

3.      If your spouse is a nonresident alien for tax purposes and chooses not to file joint return with you. You must file with a status of "married filing separately." You may still be able to claim an exemption for your spouse, but only if that spouse has no income from U.S. sources and cannot be claimed as a dependent on anyone else's tax return.

 

The answer to this question confuses most people in so many ways, with various tax preparers giving various interpretations, due to somewhat unclear wording in IRS publications. IRS Publication 501 Exemptions, Standard Deduction and Filing Information that in this situation, one can claim an exemption for your spouse only if the spouse had “no gross income”.

 

 IRS Publication 54 Tax Guide for U.S. Citizens and Resident Aliens Abroad says the same thing, specifying that the nonresident alien spouse can have no gross income “for U.S. tax purposes”. To sum it up, it is permissible and lawful under IRS rules to claim the spousal exemption (for the non-US spouse) when married filing separately and of course the increased amount for age is applicable. NOTE: The law allows this only if the spouse has NO income. For US tax purposes, NO income (for Nonresident Aliens) is defined and construed as meaning NO US-source income. If the foreign spouse has a foreign retirement pension that is non-US source, this does not conflict with the claiming of the spousal exemption.

If your spouse resided in the US for more than 183 days at any time of the year, she will be not considered as a Non-Resident Alien.

References/Related Topics

Can I Claim Head of Household If Married?

Claiming Non-Residents Aliens as dependent and child tax credit ...

IRS deductions for Canadian/Mexican dependents

***Disclaimer: I am a tax accountant and a CPA , but I am not your accountant or advocate (Unless you have signed up to my services). This communication is not intended as tax advice, and no tax accountant -client relationship results**