What are some of the tax implications of marrying a non-US citizen or permanent resident? What are some of the hidden issues that the IRS and state tax agencies may raise in an audit? The United States is one of the few countries who tax worldwide income. US taxpayers and expatriates must report all foreign bank accounts, investments, assets and associated income and complete the IRS “Report of Foreign Bank and Financial Accounts” or FBAR. Many US taxpayers and expats do not understand the reporting requirements and taxation issues associated with offshore investments or foreign corporate ownership. Here are a few things you need to know:
- Even if you are not listed as an account holder on a foreign bank account, if you have signatory authority or a financial interest in any offshore account or asset you are required to list it. As a spouse, it is prudent to disclose the account on an FBAR even if you did not financially or directly benefit from the asset under many circumstances.
- The critical decision you face as a couple is whether to file jointly, or file as “married filing separately.” This decision is quite complex and will require the insight of our experienced international tax attorneys. Filing jointly exposes you to taxation on your spouse’s worldwide income, however the joint return also provides deduction advantages and a significantly lower tax rate. Filing separately is highly dependent upon your non-resident spouse’s income and whether or not any of that income is taxable in the US. Our analysis will review the tax advantages of your entire portfolio and the income and interests for both you and your non-resident spouse.
- If you have a child, filing as the “head of household” may restore some of the deduction advantages and provide a lower tax bracket than “married filing separately.”
International tax issues are quite complex, and the tax implications of marrying a non-US citizen can actually carry significant consequences. The failure to complete and file IRS FBAR reporting could expose you to criminal tax evasion charges and substantial penalties and interest. We invite you to contact the experienced international tax attorneys at Allen Barron for a free and substantive consultation at 866-631-3470. We will work to protect your interests, and help you to understand all of the options available to you so that you and your non-resident spouse are fully informed and prepared to make the decisions that are best for your unique circumstances.