# Pros and Cons of Obtaining ITIN for NRA Spouse



## Alltimegreat1

I brought up the idea of obtaining an ITIN for my (currently NRA) wife and she wasn't crazy about the idea. Would there be any disadvantages of obtaining an ITIN for her, such as FBAR filing for her non-joint bank accounts? Would possessing an ITIN require her to file US taxes every year even if I file married filing separately?


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## BBCWatcher

I can only think of one reason why she might need an ITIN: participating in a joint U.S. tax filing. If she's a non-resident alien then she doesn't have any IRS or U.S. Treasury filing requirements. She doesn't need an ITIN for you to answer the IRS's questions on your Married Filing Separately U.S. tax return.

What did you have in mind?


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## Alltimegreat1

BBCWatcher said:


> I can only think of one reason why she might need an ITIN: participating in a joint U.S. tax filing. If she's a non-resident alien then she doesn't have any IRS or U.S. Treasury filing requirements. She doesn't need an ITIN for you to answer the IRS's questions on your Married Filing Separately U.S. tax return.
> 
> What did you have in mind?


If she had an ITIN, it would allow us to file jointly if we needed to or decided to, which might be necessary to claim the ATCT. It would also allow us to e-file. Can you see any drawbacks of having an ITIN?


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## BBCWatcher

Not really, unless you believe in black helicopters. 

But there's no rush. Cross that bridge when/if you get there. I think she can get an ITIN rather quickly.

As an aside, joint filing with a non-resident alien is "interesting." As it happens my wife and I do that -- something called a "Section 6013(g) election" -- but we only do it because it has a significant financial benefit for our household, and we're both agreeable. It does require her to do some work every year to gather financial records, and that isn't fun. Same thing, though: see how 2015 turns out in income terms. If a Married Filing Separately tax return gets you that $1000 for your child, fantastic, you're done for that year. If you get $0 (because you had a good income year), and a joint filing would get the household $1000, then it'd be something to _consider_. But I would not push hard, and I would respect her decision. It's a strange thing to ask.


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## Alltimegreat1

BBCWatcher said:


> Not really, unless you believe in black helicopters.
> 
> But there's no rush. Cross that bridge when/if you get there. I think she can get an ITIN rather quickly.


Thanks. So you think an ITIN can be obtained fairly quickly, such as within a month or two?

Additionally, if my wife has no income at all can I claim her as a dependent as well if she has an ITIN?


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## Bevdeforges

Under normal circumstances, you're advised not to get an ITIN until and unless you need one. They have recently changed the way ITINs function so that they need to be renewed every 5 years or so. Anyhow, this is the grand overview on the issue from the IRS itself: General ITIN Information This page also has some useful information: Taxpayer Identification Numbers (TIN)

I know they generally try to discourage US citizens from declaring their NRA spouses as "dependents" but if you meet all the requirements, it can be done. Depending on your sources of income, whether it's worthwhile to attempt it is another question. Start here to see if you meet the requirements: Who Can I Claim as a Dependent?
Cheers,
Bev


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## Alltimegreat1

I talked to an American acquaintance today who used to work as a tax advisor before moving to Germany. He seems to be very up to speed with regard to US tax related issues concerning expats. He strongly advised me to obtain an ITIN for my NRA wife. He said the only drawbacks are a slight amount of additional paperwork, compared with the benefits of a much higher threshold for claiming the child tax credit (especially in my case because my wife does not have much in the way of income).

He also mentioned with a good level of confidence that obtaining an ITIN would not obligate my wife to file a US tax return or submit an FBAR if we choose to nevertheless do a "married filing separately," i.e., she would only be required to report her income to the IRS in years in which we file jointly. Would anyone disagree that this is the rule?


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## Bevdeforges

Yes, that's right. The ITIN is just a way to identify a non-citizen for purposes of claiming her as a dependent or exemption or to file jointly with her. It does not commit her to filing US taxes or FBARs.
Cheers,
Bev


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## BBCWatcher

I disagree given what you described.

You've already explained your wife is reluctant to get an ITIN. Don't push the issue, then, unless and until you can demonstrate a non-trivial financial benefit to the household with a joint filing. And that's really the question, whether a joint filing makes sense in tax year 2015 or in a future tax year. The ITIN is simply an administrative prerequisite to making a joint filing. When/if the time comes, you and she will have plenty of time to arrange an ITIN. You have to renew ITINs periodically anyway.

You seem to imply that you can alternate between filing a separate return and filing a joint return on a whim. No, that's not possible. If she agrees to make a Section 6013(g) election, i.e. that you switch from a separate return to a joint return with her, if she then subsequently decides to revoke her election then that's that. Once revoked, you have to file a separate return, for life, unless and until she becomes a U.S. citizen or U.S. resident. You/she get a maximum of one unbroken period per lifetime (without her status changing) to file jointly.


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## maz57

I'll chime in here and point out that in the IRS universe a taxpayer's spouse can never be that taxpayer's dependent. However, according to Pub. 54 it is possible to claim an exemption for a NRA spouse even if the taxpayer's filing status is married filing separately. The spouse must have no gross income for US tax purposes and must not be the dependent of another US taxpayer.

It is pretty clear that a ITIN is required to claim an NRA dependent, but it is not so clear if a number is necessary to claim a spousal exemption for someone who has absolutely no connection to the US. I claimed an exemption for my NRA spouse for a few years with no ITIN and never got a complaint from the IRS.


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## BBCWatcher

Yes, agreed.

To make it really simple (because I think it is), the real money at stake is going to be up to $1000 in the form of the Additional Child Tax Credit starting in tax year 2015. That may be possible with a separate filing, or maybe you'll need a joint filing to qualify (or qualify for the full amount). Everything else is hugely likely to be just noise since Germany's income tax rates are generally higher, so other issues probably won't matter. They'll just be variations on zero tax owed, and zero is already zero. But $1000, the ACTC, is real money. (OK, higher versus lower excess FTC accumulation is nice, but that's more speculative.)

So, let's suppose you run your simulations for tax year 2015. In your simulations you skip the FEIE/FHE, but in one case you simulate a separate filing and in the other case you simulate a joint filing. For the separate filing you determine you qualify for $500 in free money (because the ACTC is partially phased out since you earned "too much"), and in the joint case you qualify for the full $1000. Also, the joint filing boosts your excess FTC by $2000, let's suppose.

Now, armed with those facts (or whatever the facts are), _then_ take the idea of a joint filing and/or ITIN to your wife. If the immediate $500 in extra cash and future potential tax savings of $2000 are worth her collecting and reporting financial information, if she agrees, great. If she doesn't think so, fine, respect her decision.


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## Bevdeforges

Just a note here - if the OP is thinking about the Child Tax Credit and has an eligible child dependent, it is possible to file as "Head of Household" - a status which has some advantages over filing MFS. If there were references to a child in the family upthread I missed them, but I'm currently functioning at half speed due to a bad cold, so my apologies.

But I do agree with the comments urging you not to force your wife into an ITIN. The Germans have strong feelings and concerns involving personal privacy (probably for good reason) and these should be respected.
Cheers,
Bev


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## BBCWatcher

It's only possible to file as Head of Household if you qualify to file that way. "Not usually," as I read the instructions, but did you have something in mind, Bev?

Alltimegreat1 never mentioned living apart from his spouse, in particular.


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## Bevdeforges

I've seen it recommended for overseas taxpayers married to a NRA but with US citizen children in the household. Like I said, I don't recall seeing anything to indicate that the OP has kids, but with the cold/flu I'm currently nursing, I may have simply misread something.

But no, you can't take a spouse as a dependent, even with an ITIN.
Cheers,
Bev


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## BBCWatcher

If the spouse isn't living in the same home (much), then Head of Household is potentially available. We don't recommend Alltimegreat1 kick his wife out of the house if she refuses a joint filing, do we? 

Alltimegreat1 is a new father and has one U.S. citizen child born in 2015. Congratulations again, Alltimegreat1.


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## Bevdeforges

Something must have changed in the last 20 years or so <g> - because they used to recommend head of household status for overseas folks with a dependent US citizen in charge. Oh well - this cold or flu is possibly hitting me harder than I thought...

Nah, don't kick the wife out just to file HoH...
Cheers,
Bev


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