urgent TP filing 1040 spouse is an alien how do I file?

[taxea]

TP is US citizen filing 1040. Married a Thai in 2011 who was on a visa that has expired. She has lived with him since entering US. TP needs returns filed to get a tax clearance so she can get an SSN and work. How do I file so he gets a deduction for her?
Do I send a W7 with the return or obtain one online prior to filing?
This is all new to me.

[Koss]

Form W-7

Form W-7 is used to obtain an ITIN for the spouse. The form cannot be filed electronically. It must be attached to the tax return, and sent by mail to a special address found in the instructions for Form W-7. This also has the effect of filing the tax return.

Form W-7 and the tax return must be filed together with original identification documents. These documents are then returned to the taxpayer. You need to read the instructions for Form W-7 very carefully to understand what documents are required. They will not accept photocopies.

However, as I'm sure you are aware, an ITIN is not the same as an SSN. An ITIN will not make the spouse eligible to work. The issuance of an ITIN has absolutely no impact on a person's immigration status. It is used only for tax purposes. Moreover, an ITIN is only meant for a person who is not eligible to apply for an SSN.

So I have to wonder if your client really understands what he is doing.

The only thing that is clear from your post is that the spouse is an alien, married to a US citizen, and that she is present in the US on an expired visa.

Has the spouse ever been eligible to work in the US? Generally, an alien with a work permit is eligible for an SSN. If the spouse does not have an SSN, then she has probably never been allowed to work in the US.

If that is the case, then why do they need a "tax clearance"?

If she has never worked in the US, then--

- she probably is not required to file a US tax return (unless, for example, she has substantial unearned income), and
- the taxpayer is not required to file a joint return with her.

They certainly have the option of filing a joint return, and that may well reduce the tax liability. If she is not eligible for an SSN, then she would indeed need to apply for an ITIN in order to file a joint return with her husband. But getting an ITIN and filing a joint return is not going to make her eligible for an SSN, and it's not going to make her eligible to work. To do that, she either needs a visa that allows her to work, or she needs to become a permanent resident.

By law, she is eligible to become a permanent resident because she is married to a US citizen. But that process takes a lot of time. It may be reasonable for her to get an ITIN right now, so that they can file a joint return.

But you should make sure they understand that the ITIN and the joint return will not change her immigration status.

I don't think they are trying to do anything unlawful. But I have a feeling that there is something they are not telling you, or that they, or you, are making some inaccurate assumptions. You need to ask some tough questions.

Let's start with this:

If they married in 2011, and she doesn't have an ITIN or an SSN, then how did he file his 2011 and 2012 tax returns?

The only proper way would have been for him to file MFS, and he would have had to file by mail, because even on an MFS return, you need the spouse's SSN or ITIN in order to file electronically.

...unless he has children, which would have made it possible for him to use HOH status while married to a nonresident alien spouse. Yes, I know that sounds bizarre. Those rules are very complicated.

I'm gonna hazard a guess, and say that he probably filed single in 2011 and 2012, 'cause he didn't know any better. (Well, she doesn't have a social security number... and she wasn't working, so... what difference does it make? I'll just file single.)

And now they're trying to get her immigration status cleared up, 'cause her visa is expired, and technically she is present in the country illegally.

And an immigration lawyer probably told them: "If she's going to apply for permanent residency, the first thing you need to do is get your taxes straightened out. You should have filed a joint return for 2011 and 2012."

So, yes, she probably needs an ITIN at this point.

But filing a 2013 joint return is not going to magically enable her to "get an SSN and work," and it will not change the fact that she is an alien present in the US on an expired visa.

She should apply to become a permanent resident, because she is married to a US citizen. Once she becomes a permanent resident, she will be able to apply for an SSN. If she has never worked in the US, she is not required to file a tax return. But when ICE reviews her application for permanent residency, they will probably review the tax returns of the US citizen who is married to her, because the marriage is the foundation of her application for permanent residency.

If her application for permanent residency is attached to a marriage license that shows they got married in 2011, and her husband's 2011 and 2012 tax returns say that he was single, that's going to raise some questions.

I think you should get some more information, so that you, and your clients, know exactly what you are getting into here. He may need to amend 2011 and 2012.

Good luck!

BMK

[taxea]

You hit the nail on the head. "they're trying to get her immigration status cleared up, 'cause her visa is expired, and technically she is present in the country illegally. And an immigration lawyer probably told them: "If she's going to apply for permanent residency, the first thing you need to do is get your taxes straightened out.His 2011/12 returns have not been filed. "
He came to me because he has not filed 2011 and 2012.
He wants to take her exemption if he can. She has never worked in US and does not have an SSN. The Tax Clearance is for permanent residency as well as so she can work.
It was me that wanted to know whether he could file MFS in order to list her for the exemption purpose only.
Is this how it is done? MFS with W7 to the correct address and include the 1040 and necessary documents? I guess I wasn't clearer with my first post because, like I said, this is all foreign to me.
Once we get 2011 in the mail should I wait to before having him file 2012 until the ITIN is issued or can I write "applied for" on the return and manually file? Same goes for 2013. I was hoping to get this all cleared up for him asap but it sounds like it will take time to get the ITIN. What would you advise as the best course of action?
Thanks for your help. I am anxiously awaiting your next post. Mahalo

[Koss]

Re: Form W-7

It is possible for him to file MFS and take an exemption for her, but I don't see the point. She would still need an ITIN in order for him to do that. If she's going to apply for an ITIN, then they might as well file a joint return.

You can either file 2011 and wait for the ITIN, or file 2011 and 2012, with Form W-7, in the same envelope. I don't think it makes a difference. It takes a couple months to get an ITIN. I would probably put 2011 and 2012 in the same envelope.

And then I would do an extension for 2013. I think you can do a paper Form 4868, and write in "ITIN applied for" in the field for her SSN.

If you get all that stuff in the mail, then he can have signed copies of all four documents:

(i) Form W-7
(ii) 2011 return
(iii) 2012 return
(iv) 2013 extension

He can take the signed copies to his immigration lawyer, with proof of mailing, and that may help. They may wait until she gets the ITIN. But at least they'll have something that shows that they have taken steps to get into compliance...

BMK

[taxea]

Koss, I so appreciate your help. Client's main goal is to get all returns filed so I will take your advice and hope that it helps him.