u.s. expat tax guide – mexico
Do I need to include my non-US spouse’s income on my tax return?
In most cases, you don’t need to include your non-US spouse’s income on your US tax return. If they don’t earn any income in the US and aren’t a US citizen or Green Card holder, you can simply list their name without needing an SSN or ITIN.
However, if you choose to file a joint return, their global income would need to be reported, and they’d need to apply for an ITIN if they don’t already have one.
How do I report joint bank accounts shared with a non-US spouse?
If you and your non-US spouse hold a joint foreign bank account, and the combined value of all foreign financial accounts exceeds US$10,000 at any point during the year, you must report these accounts on your FBAR (Foreign Bank Account Report).
This rule applies even if your spouse’s name is also on the account. Joint accounts require special attention, so it’s crucial to know when reporting is needed to stay compliant.
Do I need to disclose my spouse’s accounts on my FBAR?
You are only required to report foreign accounts that you control or have access to. If your non-US spouse holds accounts under their own name alone, and you have no authority over them, then you don’t need to include those accounts on your FBAR.
The rule is simple: if you don’t control the account, it’s not your responsibility to report it.
Is my non-US spouse’s income taxable in the US?
It depends on how you file your taxes. If you file as Married Filing Separately, only your income is subject to US taxation, which keeps your spouse’s earnings taxed in their home country, such as Mexico.
However, if you file a joint return, their worldwide income will be taxable in the US, so think carefully before choosing this filing status, as it has broader implications.
What about my child’s foreign bank account—do I need to report that too?
Yes, if you have authority or control over your child’s foreign bank account, even though it’s not directly yours, you must still report it on your FBAR. The key factor here is control.
If you manage the account, or can sign on it, you must declare it, no matter who the primary account holder is.
Why is accurate FBAR reporting so important?
Accurately filing your FBAR is essential to avoiding hefty penalties and possible legal issues. If you fail to report an account, you could face penalties of up to US$10,000 for non-willful violations, and for willful violations, penalties can go as high as US$100,000 or 50% of the account balance.
What’s the process for filing an FBAR?
Filing your FBAR is done electronically through the FinCEN (Financial Crimes Enforcement Network) website, and the deadline is April 15, though there’s an automatic extension until October 15 if needed.
It’s important to file on time, as penalties for late filing can be severe. The form is relatively straightforward and requires you to list all foreign financial accounts where the combined value exceeds US$10,000.
What impact does my non-US spouse have on my US tax return?
Being married to a non-US citizen can complicate your tax return, especially when choosing a filing status. Most US citizens married to non-US spouses file as Married Filing Separately. This keeps your spouse’s income out of the US tax system.
However, if you want to take advantage of certain tax benefits, you may choose to treat your spouse as a US tax resident—but this means their global income becomes subject to US taxes. The decision can affect deductions and credits, so it’s important to weigh the pros and cons.
How do I get an ITIN for my non-US spouse?
If your non-US spouse doesn’t have a Social Security Number (SSN), they’ll need an Individual Taxpayer Identification Number (ITIN) to file taxes jointly. Here’s what you’ll need to do:
- Complete Form W-7: This form is used to apply for an ITIN, and you’ll need to provide personal details for your spouse.
- Gather documentation: Proof of identity and foreign status is required, such as a passport or birth certificate.
- Submit with your tax return: The completed W-7 form and supporting documents must be attached to your tax return and mailed to the IRS.
- Wait for processing: It usually takes about 7 to 11 weeks for the IRS to process the application and issue the ITIN.
What if my spouse’s ITIN has expired?
If your spouse already has an ITIN but it has expired, you’ll need to renew it.
The renewal process is similar to the original application, and it’s done by submitting Form W-7 again with updated documents.
How can a tax professional help with expat taxes?
Working with a tax professional who specializes in international tax law can help you avoid costly mistakes, make the most of your available tax breaks, and ensure you stay compliant with all your reporting requirements.
