Exemption for NR Alien Spouse

[Kram BergGold]

I read an article. It gave this example.
Married couple (he is a US Citizen and she is a NR Alien) lives abroad all year. He makes 200k she makes 100k. They have 2 children. She does not want to file a US return. So he files as H of H and claims the 2 kids. The article goes on to say, he can claim an exemption for the spouse. To me that is nuts, as she has income over $3,950. Is the author correct?

[TAXNJ]

Santa Claus author

I read an article. It gave this example.
Married couple (he is a US Citizen and she is a NR Alien) lives abroad all year. He makes 200k she makes 100k. They have 2 children. She does not want to file a US return. So he files as H of H and claims the 2 kids. The article goes on to say, he can claim an exemption for the spouse. To me that is nuts, as she has income over $3,950. Is the author correct?

An author of an article said, Yes, there is a Santa Claus but could not provide the facts as to where and how to meet the real Santa Claus other than people playing a Santa Claus role. Wondering if it is the same author!

1 - what article?

2 - who wrote the article?

3 - what did the author reference as fact to support the position?

4 - did you contact the author for the facts?

[Burke]

See TaxPro Journal (NATP), Fall, 2015: Article is "Foreign Tax Issues", page 35, by Roger Adams, EA. If this is the one, I read it too, and my eyebrows raised, although I don't have any experience in this area so I put it aside for further research. The article concerns the FITC, and the marital filing status was only mentioned in passing with no cites. He continues the illustration with the TP filing HOH, claiming the children and spouse on 6c. She is a non-resident alien. He is not. She has employment income of $102,300 but it appears that is from her native country, and it states it is free from income tax in that country "for deployed special operators." There is a US Tax Treaty with this country. The author has a bio at the end, he lives in Portugal, specializes in expatriate and nonresident alien taxation and tax treaty issues. He lectures for the Enrolled Agents Exam Prep Course at www.irsexams.com.

[TAXNJ]

That's

See TaxPro Journal (NATP), Fall, 2015: Article is "Foreign Tax Issues", page 35, by Roger Adams, EA. If this is the one, I read it too, and my eyebrows raised, although I don't have any experience in this area so I put it aside for further research. The article concerns the FITC, and the marital filing status was only mentioned in passing with no cites.

That's the problem with some of these articles with only mentioned in passing with no cites. Same problem with the "Santa Claus" article.

Answer is to contact the author for substantiation. Otherwise it is a waste of time unless one likes reading mystery articles.

[Burke]

See addl info added to my post and see if that helps.

[TaxGuyBill]

Publication 501 defines "gross income" as "Gross income is all income in the form of money, property, and services that is not exempt from tax".

For example, non-taxable Social Security is not considered as "gross income" for purposes of claiming a Qualifying Relative. If it is not subject to US taxation, it would seem that the non-resident alien wife's income is not considered as "gross income" for purposes of claiming a Qualifying Relative.

[David1980]

claiming the children and spouse on 6c.

So he claims the spouse as a dependent? I would have figured the spousal exemption would be claimed on 6b.

[TAXNJ]

Guessing game

Good post. Many are to guess the answer so it is a mystery article.

To find the answer contact the author of the article.

[appelman]

From Pub. 17

"Separate return. If you file a separate return, you can claim an exemption for your spouse only if your spouse: Had no gross income,

Is not filing a return, and

Was not the dependent of another taxpayer.

This is true even if the other taxpayer does not actually claim your spouse as a dependent.
You can claim an exemption for your spouse even if he or she is a nonresident alien. In that case, your spouse: Must have no gross income for U.S. tax purposes,

Must not be filing a return, and

Must not be the dependent of another taxpayer."

I do not believe that filing HofH will alter this.

[TAXNJ]

Believe

"Separate return. If you file a separate return, you can claim an exemption for your spouse only if your spouse: Had no gross income,

Is not filing a return, and

Was not the dependent of another taxpayer.

This is true even if the other taxpayer does not actually claim your spouse as a dependent.
You can claim an exemption for your spouse even if he or she is a nonresident alien. In that case, your spouse: Must have no gross income for U.S. tax purposes,

Must not be filing a return, and

Must not be the dependent of another taxpayer."



I do not believe that filing HofH will alter this.

When you say "I do not believe that filing HofH will alter this." Are you "believing" or you know and can support it?

[appelman]

Including the rest of the quote

When you say "I do not believe that filing HofH will alter this." Are you "believing" or you know and can support it?

Well, yes, actually, I can, just by reading a little further. The entire relevant quote is:

"Separate return. If you file a separate return, you can claim an exemption for your spouse only if your spouse:

Had no gross income,

Is not filing a return, and

Was not the dependent of another taxpayer.

This is true even if the other taxpayer does not actually claim your spouse as a dependent.
You can claim an exemption for your spouse even if he or she is a nonresident alien. In that case, your spouse:

Must have no gross income for U.S. tax purposes,

Must not be filing a return, and

Must not be the dependent of another taxpayer.

Head of household. If you qualify for head of household filing status because you are considered unmarried, you can claim an exemption for your spouse if the conditions described in the preceding paragraph are satisfied.

To claim the exemption for your spouse, check the box on line 6b of Form 1040 or Form 1040A and enter the name of your spouse in the space to the right of the box. Enter the SSN or ITIN of your spouse in the space provided at the top of Form 1040 or Form 1040A."

QED

[TAXNJ]

Thanks. Reference

Well, yes, actually, I can, just by reading a little further. The entire relevant quote is:

"Separate return. If you file a separate return, you can claim an exemption for your spouse only if your spouse:

Had no gross income,

Is not filing a return, and

Was not the dependent of another taxpayer.

This is true even if the other taxpayer does not actually claim your spouse as a dependent.
You can claim an exemption for your spouse even if he or she is a nonresident alien. In that case, your spouse:

Must have no gross income for U.S. tax purposes,

Must not be filing a return, and

Must not be the dependent of another taxpayer.

Head of household. If you qualify for head of household filing status because you are considered unmarried, you can claim an exemption for your spouse if the conditions described in the preceding paragraph are satisfied.

To claim the exemption for your spouse, check the box on line 6b of Form 1040 or Form 1040A and enter the name of your spouse in the space to the right of the box. Enter the SSN or ITIN of your spouse in the space provided at the top of Form 1040 or Form 1040A."

QED

Thought original post said married spouses. You bring out a good point. Will you say what the reference for "Head of household. If you qualify for head of household filing status because you are considered unmarried, you can claim an exemption for your spouse if the conditions described in the preceding paragraph are satisfied.

To claim the exemption for your spouse, check the box on line 6b of Form 1040 or Form 1040A and enter the name of your spouse in the space to the right of the box. Enter the SSN or ITIN of your spouse in the space provided at the top of Form 1040 or Form 1040A."

[appelman]

Huh?

Maybe I don't understand your question. I stop with Pub. 17. If you want the code and regs, you'll have to find them for yourself.

Actually, the "considered unmarried" criterion is relaxed in the case of non-resident spouses. There is no requirement that they live apart for the last half of the year, See:

[TAXNJ]

No doubt

Maybe I don't understand your question. I stop with Pub. 17. If you want the code and regs, you'll have to find them for yourself.

Actually, the "considered unmarried" criterion is relaxed in the case of non-resident spouses. There is no requirement that they live apart for the last half of the year, See:

http://www.irs.gov/Individuals/Inter...d-of-Household

Not doubting your response. Actually your reply post was worth reading and following up with you. You provided your reference which makes sense to the original post and takes the guessing out of why not reporting spouses foreign income (smart spouse did not want to report that income to U.S.), but claim spouse as a exemption with no problem of gross income test issue. Very good reply post by you.

As supported by your reference, in part states:

"You can use the head of household column in the Tax Table or the head of household Tax Rate Schedule. It may be advantageous to choose to treat your nonresident alien spouse as a U.S. resident and file a joint income tax return. Once you make the choice, however, you must report the worldwide income of both yourself and your spouse.

[Burke]

So he claims the spouse as a dependent? I would have figured the spousal exemption would be claimed on 6b.

He claimed the spouse as a dependent on 6c, because they did not wish to file a joint return. So she is not a signatory on the form. Also, one thing that was not specifically stated is whether she actually lived with the spouse. Based on the facts quoted, and the term "deployed special operators," I am thinking she is a resident alien and in the US, or some other country. It appears that only under that status, would she not be liable for income taxes in her native country. But the gross income rule is what bothers me about claiming her. And the filing requirement for her (MFS?)