Nonresident alien spouse treated as resident alien

[waynecpa]

I have a new US citizen client who has a Norwegian wife and they live in Norway with their 4 kids (US citizens). He has just realized that he needed to be filing returns all along on his worldwide income. He has filed some returns in the past when he has had US income (interest, 401(k) withdrawals), but hasn't when he has only had Norwegian income. He thinks he may have elected to treat his nonresident alien wife as a resident alien in 2001 but can't find the return. He does have another return he filed in 2007 as a MFJ return (without any election apparent). I do know that if she is a resident alien spouse, he is unable to file HOH, but has to file as MFS. The question is whether his wife has the same filing requirement as he has. I do believe the answer is yes, but wanted to see if there is something I am missing.

We are not sure that an election was filed, but if one was we are not sure they want to revoke it. They may move to the US later and might want the ability to have this election again.

[Bees Knees]

A non-resident alien is not required to file a U.S. income tax return, unless the non-resident alien has U.S. source income. Being married to a U.S. citizen does not change that fact. The reason why a non-resident alien spouse may elect to be taxed as a resident alien (and thus be subject to tax on worldwide income) is so that his/her U.S. citizen spouse can file a married filing joint return with him/her. If the non-resident alien spouse does not make the election, then the U.S. citizen spouse has to file married filing separate.

Thus, the question of making the election centers on which method produces less tax: filing a joint return and including all worldwide income of both spouses, or filing a married filing separate return that only taxes the U.S. citizen spouse's worldwide income. HOH is out of the picture because the spouse's are probably living together for the entire year.

[waynecpa]

Clarification

I agree with most of your reply, but the question centers around when an election has been made whether the non-US citizen now faces the same filing requirements as a US citizen.

As for HOH, per TTB, a taxpayer is considered unmarried for HOH filing status purposes if his spouse was a nonresident alien at any time during the year and the taxpayer does not elect to treat the nonresident spouse as a resident alien. However, the spouse is not a qualifying person for HOH purposes.

[Kram BergGold]

My educated Guess

I am of the belief that the election to file MFJ is a year to year election. So any past choices would not affect any year after the election.

[AZUKHiker]

NRA Election

Agreed that they have a choice of MFJ or MFS for tax years after the election to treat the NRA as a resident. However, not HOH as the NRA is now treated as a resident for all tax years. Also the NRA will have a US reporting requirement for all tax years as they are now treated as a US resident for tax purposes.

So they will be filing MFJ or MFS in all future years unless the election is revoked or fails.