U.S. TAX GUIDE IN MEXICO
Do I have to report information about my non-US spouse to the IRS?
It depends. Normally, when filing US tax returns, a US citizen or Green Card holder that is married to a Mexican does not have to report their spouse’s income, as long as their spouse is not a US citizen, Green Card holder or generating an income from the United States.
All that is required is the spouse’s name, they don’t need to have a Social Security Number (SSN) or ITIN.
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What about joint bank accounts with a non-US spouse?
If you have a joint bank account with your spouse in Mexico, you must include this account on your FBAR (Foreign Bank Account Report).
This applies because you have ownership, control or signature authority over the account.
Do I need to report my non-US spouse’s individual bank accounts on the FBAR?
No, you do not need to report bank accounts that belong solely to your non-US spouse on the FBAR. Only accounts where you are a joint account holder or have signature authority are required to be reported.
Does my non-US spouse in Mexico need to pay US taxes?
It depends on your filing status.
Married Filing Jointly
If you are married to a non-US citizen or non-resident alien, you have the option to file jointly.
When you choose to file a joint return, your spouse will be treated as a US resident for tax purposes. This means your spouse’s worldwide income will be subject to US taxation.
Married Filing Separately
If you decide to file separately, your foreign spouse will not be subject to US taxation on their income. You will only report your own income on your US tax return. This option is often simpler and can be beneficial if your spouse’s income is significant and already taxed at a higher rate in Mexico.
What if I have signature authority over my child’s bank account?
If you have opened a bank account for your child and have signature authority over it, you must report this account on the FBAR, even if your child is not a US citizen.
It’s important to remember that the IRS requires reporting of any account over which you have control or authority.
Why is accurate FBAR reporting important?
Failing to report required accounts can result in severe penalties, including fines and potential criminal charges.
This is why it’s important to understand which accounts must be reported and ensure all required accounts are included in your FBAR filing.
How do I file an FBAR?
FBARs are filed electronically through the Financial Crimes Enforcement Network’s (FinCEN) website. The deadline for filing is April 15, with an automatic extension to October 15. Ensuring you file on time is critical to avoid penalties.
How does my filing status affect my tax return when married to a non-US person?
When married to a non-US person, your filing status can impact your tax return. Typically, you will file as married filing separately unless your spouse elects to be treated as a resident for tax purposes.
This decision can affect your deductions and credits, so it’s important to seek advice from a tax professional and consider your options carefully.
How do I get an ITIN if my foreign spouse needs it?
If your foreign spouse needs to be included on your US tax return, they will need an Individual Taxpayer Identification Number (ITIN).
- Step 1: Complete Form W-7: Fill out Form W-7, Application for IRS Individual Taxpayer Identification Number. This form requires information such as the reason for applying, personal details of your spouse, and supporting documents to prove foreign status and identity.
- Step 2: Gather Supporting Documents: You will need to submit original documents or certified copies from the issuing agency to prove your spouse’s identity and foreign status. Commonly accepted documents include:
- Passport (standalone document)
- National identification card (with photo)
- US or foreign driver’s license
- Birth certificate (required for dependents under 18)
- Foreign voter’s registration card
- Visa issued by the US Department of State
- Step 3: Attach the Documents to Your Tax Return: You must attach the completed Form W-7 and the supporting documents to your US tax return. If you are applying during the tax year and not filing a return, you can attach a letter explaining your circumstances.
- ‘Step 4: Submit the Application: Mail the completed application package to the IRS at the address specified in the Form W-7 instructions. Alternatively, you can apply in person at an IRS Taxpayer Assistance Center (TAC) or through an IRS-authorized Certifying Acceptance Agent (CAA).
Remember, it typically takes about seven weeks for the IRS to process an ITIN application. However, during peak processing times, it might even take longer. But once approved, the IRS will send you a notice with the ITIN.
What if my spouse already has an ITIN, but it expired?
If your spouse already has an ITIN but it has expired, you will need to renew it. The renewal process involves submitting a new Form W-7 with updated supporting documents.
How can a tax professional help me with international tax issues?
Consulting with a tax professional specializing in international tax issues can help you navigate the complexities of filing with a non-US spouse. They can provide personalized advice based on your unique situation.
