There are several options for filing status when a U.S. person is married to a non-U.S. person. First, the standard method is to file as married filing separately. This is the easiest option as it does not require any election nor does it require your spouse have a U.S. tax identification number. Next, there is the option for the spouse to elect to be taxed as a U.S. person, which would allow for married filing jointly status. Although this would then subject the non-U.S. spouse to worldwide tax and asset reporting, there are situations it can be advantageous. Lastly, and lesser known, you may qualify to file as head of household. The key to filing as head of household is that you must have another qualifying relative, your non-U.S. spouse cannot be the qualifying person. Filing as the head of household can provide several tax benefits. This status is not as known because it is generally assumed that if you are married you don’t qualify. However, even if you are married, as long as your spouse is not a U.S. person and you meet the criteria below it may be possible.
Head of Household Qualifications – General Rules
First, you must be considered unmarried to qualify. You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you don’t choose to treat your nonresident spouse as a resident alien. Keep in mind, as stated above, your spouse isn’t a qualifying person for head of household purposes, you must have another qualifying person. There is a long list of who can be that other qualifying person, but generally it is a dependent, family member for whom you provide more than half of their financial support and lived with you for more than half the year.
If you qualify for head of household for tax purposes, you receive a lower tax rate and a higher standard deduction that married filing separately. Nevertheless, with several options and many factors to consider, it is important that the entire situation is analyzed to determine what is the best decision.