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Unlike most Americans I usually end up owing money on my income taxes so I never pay much attention to them until March. This year, however, it dawned on me that I was now married instead of single and that my withholding all year had been as if I weren't married. As I suspected a quick rough estimate of my taxes revealed that for the first time in many years I was due a refund and a rather substantial one at that.
The catch, however, came when I realized that one of the required elements of the form 1040 that needs to be filled out is your spouses social security number. My wife has never even been to the United States so she doesn't have a social security number, a green card number, or any other kind of government issued number. After some digging around I found that non-residents can get what the IRS calls an ITIN number. (Individual Taxpayer Identification Number) In fact, an ITIN is required by the IRS if the person filing doesn't have a social security number.
The instructions for IRS form W-7 (Application for ITIN) are a bit confusing to say the least. In order to file for an ITIN you have to file it with a completed tax return. At the same time, the instructions on the 1040 say that you have to file it with an ITIN or a social security number. I would love to meet the genuis that thought this system up. It turns out that the correct procedure is to write in "Applied For" in the social security number box on the 1040 form. This, of course, causes fits with your tax software if you use any sort of tax prepartion tool.
Now, here's where things really get messy. You have 3 ways that you can file. You can file as married filing jointly, married filing seperately, or you can both file as single and then do an ammended return later. In my case my wife lives in Nicaragua and had no income for 2007. The best choice for us is married filing jointly because instead of owing money I get a refund. The process is a whole lot easier because my wife doesn't have any income other than from me. The messy part comes in if your spouse has income but I'll get to that later.
Parameters:
Married filing jointly - This is the option I did the most research on so I'm pretty confident I'm correct on this one. The process goes like this. First, you fill out a W-7 application for an ITIN. In order to file this you also need either your spouses actual passport or a certified/notarized copy. We had to go to the US Embassy in Managua to get this done. Along with the W-7 I included my completed 1040 form and listed my wife's social security number as "applied for". Finally, I included a letter stating that for tax purposes my wife wishes to be treated as a resident of the United States. The IRS publication number 519 (US Tax Guide For Aliens) explains why you need this letter in The section entitled "Nonresident Spouse Treated As A Resident". (It's a great read btw if you have insomnia) The way I understand this is if you make this declaration then all of your foreign spouses income is subject to US taxation. In my case my wife has no income so it's no big deal. If your spouse earns money I would consult a tax professional rather than taking the word of some guy with a website...
Update (3/15/2008) - My refund was electronically deposited into my bank account yesterday so I can say with confidence that the above procedure is correct.
Married filing seperately - I didn't research this a great deal since it doesn't apply in our case but I assume it's the route you would want to take if the foreign spouse earns a decent income. I would assume the US citizen would just file their normal return and the foreign spouse would need to file for an ITIN and also include a return for any income taxable in the US. Again, I didn't research this a whole lot but I think that's what would happen.
File as single then ammend your return later - I would call this the procrastinators choice although it's perfectly acceptable to do this. You can file your return as if you were single and file seperately for an ITIN for your spouse. Once your spouse has their ITIN you can then file an ammended return with the proper identification. I'm not quite sure why you would want to do this since it seems like more work. I would rather just get it over with but that's just the way I am.
File as single and pray no one finds out you're married - I'm not an expert but I'm pretty sure this is a bad approach and probably illegal...
Please remember, I did this research for my specific case so what I say may not apply to you. There are, for example, special rules for spouses in specific countries like Canada and Mexico that differ from what I have stated above. Again, if your spouse has income this process gets a whole lot more tricky so be sure to seek compotent advice before filing your taxes. The information above is intended only to help guide you through the process and give you an idea of where to look for more information. In closing, if you get audited, don't blame me. ;)
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