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us expat tax guide – united kingdom

Should I include my non-American spouse on my US tax return?

Usually not, unless there is a good reason to do so. If your spouse does not hold US citizenship or a Green Card, they’re likely not required to file a US tax return, and you don’t need to include them on your US tax return. It is sufficient to mention only their name.

Can I add my non-US spouse’s financial information to my US tax return?

Many US persons with non-US spouses opt to file just for themselves to avoid bringing their spouse into the US tax system, which would require reporting their worldwide income and potentially expose them to US taxes. However, you can include their information if they obtain a Social Security Number or an Individual Taxpayer Identification Number (ITIN).

How do I obtain a Social Security Number or ITIN for my non-US spouse?

Your non-US spouse is likely ineligible for a Social Security Number, but they can apply for an ITIN by filing Form W-7 with the IRS, though this requires specific circumstances to be approved.

When should I consider filing jointly with my non-US spouse?

Consider including your non-US spouse on your tax return to qualify for benefits such as the Child Tax Credit Refund.

For instance, if you earn little and your spouse has taxable income in the UK, filing jointly after obtaining an ITIN for them might allow you to benefit from refundable credits, essentially getting money back from the IRS despite owing no US tax. However, this also means your spouse must comply with US tax filing requirements moving forward.

Can I claim the IRS Additional Child Tax Credit Refund for my non-US citizen children?

No. If they are eligible for US citizenship, do that first and then apply for their Social Security Number. You can then claim the Child Tax Credit for your US citizen children if you meet the criteria.

IRS Criteria for Dependents

  1. Relationship Test: The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister, or descendant of any of these individuals (which includes your grandchild, niece, or nephew).
  2. Age Test: The child must be under age 17 at the end of the year you claim the credit.
  3. Support Test: The child must not have provided more than half of their support during the tax year.
  4. Dependent Test: The child must be claimed as a dependent on your tax return.
  5. Citizenship Test: The child must be a US citizen, US national, or US resident alien.
  6. Residence Test: The child must have lived with you for over half of the tax year.

Is there a tax-free gift limit for my non-US spouse?

Yes, annual limits exist to how much a US citizen can gift a non-US citizen spouse without incurring gift tax. These are: US$164,000 (for 2022), US$175,000 (for 2023), and US$185,000 (for 2024) These limits are adjusted periodically to reflect changes in the law or inflation.

What steps should I take if considering these options?

  1. Consult with a tax professional: Understanding the Australian and US tax systems is crucial, especially when making decisions about filing statuses and including family members on your tax return.
  2. Gather all necessary documentation: Having all relevant documentation in order is essential whether applying for an SSN or ITIN or preparing for joint filing.
  3. Consider long-term implications: Including a non-US spouse on your tax return is a significant decision that affects future filings and potential tax liabilities.
  4. Stay informed: Keep up-to-date with changes in tax laws to ensure compliance and optimize your tax situation.

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