# International couple taxing filing status



## international001 (Feb 16, 2018)

My situation:
US resident with non-US spouse (not married) and two children living in Spain
I spent more than 6 months a year with family and provide for most 50% of their economics needs. Just got SS for the kids in consulate.
So far I have been filing taxes as single, without claming any dependents.

My questions:
Is it possible to file as a head of household (listing kids as dependents) ? My spouse would file taxes in Spain. Should it be a big deal if she claims the dependents as well?
Can I make amendments and change my file status to head of household for previous years?
Anything that would send a flag to the IRS?


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## Nononymous (Jul 12, 2011)

I'm not an expert on these things, having cheerfully ignored my own US tax filing obligations. However, I believe that you cannot claim the child tax credit if you are not in fact married, which may also apply to claiming them as dependents.

If your children are born in Spain I would be cautious about dragging them into US tax system by claiming them as dependents. If they remain outside the US, you don't want them having to file US tax returns later in life. Certainly insure that banks and other financial institutions are not aware of their US citizenship; having a non-US birthplace will help them remain off the radar.


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## international001 (Feb 16, 2018)

Why would you need to be married to get the credit?

Google '7 Requirements for the Child Tax Credit'

IRS already has the SSN numbers. Why would claiming a child as dependent would make the IRS more eager to investigate them later?


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## Nononymous (Jul 12, 2011)

Apologies, apparently wrong on the married bit, it was likely in reference to something else related to US tax.

As for the other point, as a general rule it's best to keep children as far off the US radar as possible so that they will more easily be able to live their lives without needing to deal with tax compliance issues. If they do not have a US birthplace that is a huge advantage though, they won't face any restrictions on banking or investment services due to FATCA if they do not disclose US citizenship.

If you can claim the child tax credit and in fact suck money out of the US on their behalf, that may be a worthwhile bargain - it will more than cover the cost of renunciation down the road, should they so choose. Stick the money in an investment account and turn it over to them when they turn 18, by way of reparation for having documented their US citizenship.


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## Bevdeforges (Nov 16, 2007)

This is a real tricky area. Not being married, you can't file as married (though you aren't - so no problem there). 

I believe there are some restrictions on who you can claim as a dependent, and that may be based on their nationality. The IRS Publication 929 https://www.irs.gov/forms-pubs/about-publication-929 has all the details on this.

One other catch is that all dependents you claim must have either a US SSN or an ITIN. If they are your children, you may need to make sure they are registered as US citizens with the Consulate and then apply for their US SSN if they don't have them. If they are your partner's children, there's a reasonable possibility you can't claim them. (But check the publication for that.)

I don't know what the Spanish requirements are for claiming children as dependents, but technically for US taxes, you need to be providing over 50% of their support in order to claim them. 
Cheers,
Bev
PS Sorry for the delay in replying - I had this response ready and got distracted before I could post it. I see some of the issues have been raised in the interim. Still, check that IRS publication for the info on who you can claim as a dependent.


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## Moulard (Feb 3, 2017)

You can file using the Head of Household if you meet all 3 of these Head of Household filing requirements:

1) You were not married (you were single, divorced, or legally separated), or were "considered unmarried" on the last day of the tax year.

2) You paid more than half the cost of "keeping up a home" for the year.

3) A "Qualifying Person" lived with you in that home for more than half the year, except for temporary absences.

It would appear, by what you have indicated that you meet points 1 and 3.

Not relevant in your case, but one of the most commonly misunderstood points on HoH filing is that you CAN file as head of household even if you are married.. however generally that has to be to a NRA spouse (and thus "considered unmarried") AND you meet the other filing requirements.


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## international001 (Feb 16, 2018)

Nononymous said:


> Apologies, apparently wrong on the married bit, it was likely in reference to something else related to US tax.
> 
> As for the other point, as a general rule it's best to keep children as far off the US radar as possible so that they will more easily be able to live their lives without needing to deal with tax compliance issues. If they do not have a US birthplace that is a huge advantage though, they won't face any restrictions on banking or investment services due to FATCA if they do not disclose US citizenship.
> 
> If you can claim the child tax credit and in fact suck money out of the US on their behalf, that may be a worthwhile bargain - it will more than cover the cost of renunciation down the road, should they so choose. Stick the money in an investment account and turn it over to them when they turn 18, by way of reparation for having documented their US citizenship.


Good point about FATCA. I guess I'll have to deal with it at some point. 

I'm not there yet (kids are little). Why would it make a difference the birthplace? In theory, if you are US citizen, you cannot invest in Spain.

But perhaps I'll teach them how to invest in US. Given that taxes are higher in Spain, it should be fine for them to file taxes in the future in US, claim the tax credit and don't pay anything in US, no?


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## international001 (Feb 16, 2018)

Moulard said:


> You can file using the Head of Household if you meet all 3 of these Head of Household filing requirements:
> 
> 1) You were not married (you were single, divorced, or legally separated), or were "considered unmarried" on the last day of the tax year.
> 
> ...


Damm... I thought I had a excuse not to get married ;-)

I also qualify for 2). But I don't know how it could be checked strictly (I guess it's just a check to make sure the other person does not file as HOH in *US* taxes)

Most importantly pub 501 seems to indicate that child can be US resident in other country if he is US citizen.

My fear is that it would signal a flag to IRS, specially if I do amendments. I want to go the safe route


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## Moulard (Feb 3, 2017)

If you filed previously as "single" and the net result was that you owed no US tax, I would not bother amending your past returns. Simply not worth the effort.


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## Bevdeforges (Nov 16, 2007)

international001 said:


> I'm not there yet (kids are little). Why would it make a difference the birthplace? In theory, if you are US citizen, you cannot invest in Spain.
> 
> But perhaps I'll teach them how to invest in US. Given that taxes are higher in Spain, it should be fine for them to file taxes in the future in US, claim the tax credit and don't pay anything in US, no?


If the kids were born in the US, that appears on their passports (in many countries) and is a presumption of US citizenship. If they are born overseas but have US citizenship through a parent or some other way, there is nothing to tip off the banks or financial institutions that they are US citizens (as long as they have another citizenship they can fall back on for basic i.d.). In many countries it makes life much easier.

As far as investing in the US, just be aware that it can be difficult to open a US based account from overseas. Usually requires at least a face to face visit to the bank or financial institution. (And that's due more to Know Your Customer regulations, which are international these days, than to FATCA.)

And to another point mentioned here, as a single parent, you have the option to file as HOH. It's not obligatory. I wouldn't waste any time or effort amending past returns. If you wind up amending mainly to claim a refundable credit (like the child credit) that can draw attention to your situation. The kids are little, as you say, so plenty of time to cash in on that going forward.
Cheers,
Bev


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## international001 (Feb 16, 2018)

Moulard said:


> If you filed previously as "single" and the net result was that you owed no US tax, I would not bother amending your past returns. Simply not worth the effort.


Did file as single without claiming dependents, and owing taxes. So changing status will save quite a bit


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## international001 (Feb 16, 2018)

Bevdeforges said:


> If the kids were born in the US, that appears on their passports (in many countries) and is a presumption of US citizenship. If they are born overseas but have US citizenship through a parent or some other way, there is nothing to tip off the banks or financial institutions that they are US citizens (as long as they have another citizenship they can fall back on for basic i.d.). In many countries it makes life much easier.
> 
> As far as investing in the US, just be aware that it can be difficult to open a US based account from overseas. Usually requires at least a face to face visit to the bank or financial institution. (And that's due more to Know Your Customer regulations, which are international these days, than to FATCA.)
> 
> ...



They are born outside the US. You have to report the birth to the consulate and ask for a SSN. Not sure why bank would not get a tip if they are to get it when kids are born in US.

I have open many accounts w/o having to deal in person. I just need a US address and a SSN

What do you mean 'cash in going forward'? You have only a few years do do ammendments


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## Bevdeforges (Nov 16, 2007)

international001 said:


> They are born outside the US. You have to report the birth to the consulate and ask for a SSN. Not sure why bank would not get a tip if they are to get it when kids are born in US.


The banks don't get tipped off directly about kids' nationalities. It's just that in some countries, birthplace is part of the standard identity information that is collected for any registration. If someone's bank application asks for place of birth and that happens to be in the US, it's generally just assumed that person is a US citizen unless he or she can prove otherwise (i.e. their parents were foreign diplomats in the US when they were born, or they have a Certificate of Loss of Nationality). 



> I have open many accounts w/o having to deal in person. I just need a US address and a SSN


Since implementation of the OECD Know Your Customer rules a few years back, this is becoming harder to do. Opening a new account in a bank you've done business with is usually no problem. Opening a new account in a new bank back in the US can be a bit trickier lately.


> What do you mean 'cash in going forward'? You have only a few years do do ammendments


Not talking about amendments. But going forward, if you file as HOH, you can claim the credit for as many years as your kids have until they age out of eligibility for the credit. Just be aware that, if you want to file for the child credit, you can't take the FEIE and will have to use the Foreign Tax Credit approach to avoiding double taxation. Again, no knowledge of how this stuff works in Spain, but in France many folks in lower income groups find that the income taxes in France can be considerably lower than the US income taxes.
Cheers,
Bev


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## Nononymous (Jul 12, 2011)

international001 said:


> Good point about FATCA. I guess I'll have to deal with it at some point.
> 
> I'm not there yet (kids are little). Why would it make a difference the birthplace? In theory, if you are US citizen, you cannot invest in Spain.
> 
> But perhaps I'll teach them how to invest in US. Given that taxes are higher in Spain, it should be fine for them to file taxes in the future in US, claim the tax credit and don't pay anything in US, no?


So I think part of the confusion here due to the fact that you are still living in the US, and filing in the US as a resident. If you were in Spain only, you'd possibly have a better sense of the toxicity of US citizenship when living abroad. You may be getting advice that assumes you're actually living in Spain, but more importantly, you are viewing this through the lens of US citizenship being a good thing for your kids, not a bad thing.

Basically, if your kids are going to stay in Spain, they need to conceal the fact of US citizenship so they don't face restrictions on banking and investment services, in addition to FATCA reporting. It goes without saying that they should never file US tax returns if they don't plan on moving to the US. Given that they were born in Spain, that will be very easy for them to do, provided they keep quiet about parentage.


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## Nononymous (Jul 12, 2011)

international001 said:


> They are born outside the US. You have to report the birth to the consulate and ask for a SSN. Not sure why bank would not get a tip if they are to get it when kids are born in US.


Bev explained this, but I'll repeat. If banks see a US birthplace on an ID document, they assume US citizenship. There is no mechanism to alert them if a child born outside the US acquires a US passport or SSN. If a bank knows that one parent is a US citizen, they may make assumptions about a child's citizenship, but really they shouldn't because transmission of citizenship isn't automatic in every case.

To my earlier point, having US citizenship is *not a good thing* for children living outside the US. Parents are not required to register births abroad with the consulate to document citizenship. Due to FATCA, increasing numbers are refusing to do so because they don't want the taint of US citizenship to cause problems for their kids later in life. A child born outside the US but with US citizenship should keep that fact a deep, dark secret around any financial institutions in their home country.


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## Nononymous (Jul 12, 2011)

Bevdeforges said:


> Just be aware that, if you want to file for the child credit, you can't take the FEIE and will have to use the Foreign Tax Credit approach to avoiding double taxation.


Advice that assumes the OP is living in Spain, rather than resident in the US.


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