As if expatriate taxes were not already complicated enough, what is you add a marriage to a non-U.S. citizen to the equation? This creates an additional layer of complexity at tax filing time. Questions pop up like:
"Should we file married jointly or separately? What are the tax consequences for these situations...which is best for the situation?"
Because of the Foreign Bank Account Report (FBAR), you must file if you have signatory rights, even if the account is in your spouses name. You'll also be required to file if at any point your combined accounts exceed $10,000.
Additional questions that might be asked are:
- Will your spouse’s reported income push you into a higher tax bracket?
- Is there is any potential passive income—which is income not actively earned from things like investments, rental income, dividends or interest—or capital gains from investments your spouse owns that must be recognized now or in the future?
- Are you willing to lose the ability to put assets in your nonresident alien spouse’s name so that you are under the reporting requirements threshold?
- Will the potential income growth of your spouse in the future be over the foreign earned income exclusion?
Probably one of the most important expatriate benefits, for both the employee and the company, is the support with tax counseling, prep and filing in both the home and host locations!
Overall, my note to anyone with a non-U.S. spouse trying to figure out the best way to file taxes is to evaluate all of the options above. It’s important to remember that this topic is always complicated. Every situation is different and depends completely on the unique facts and circumstances of the situation. Along with planning a wedding, family and other future life events with the person of your dreams, don’t forget about these important financial and tax decisions that go along with the joys of marriage.