ITIN and Tax procedures - Confused

[devusr 41]

I'm (US Citizen, Petitioner) is trying to understand the ITIN and Tax procedures for my wife (Sri Lanka citizen, beneficiary).

 

1) I want to get an ITIN number to add her to my bank account and such. Once I get an ITIN number, does this mean she has to file taxes with IRS?

2) She is unemployed and has no income. However, I remit money to her bank account every month or so to help pay for rent, food, and utilities etc. The rental lease for the house is under her father's name and I got this rental property before we were married (February, 2020). We got married April 2021. Based on this, what is the best tax filing option for us? Married filing jointly, Married filing separately, or head of household? Which is the easiest/less hassle? I don't want to have to mail her actual passport to IRS and take a chance on it being lost.

 

3) If married filing separately, does she need to file taxes?

 

4) On the tax return, I believe it asks the number of dependents I have (just from what I recall...not sure). If I'm married filing separately, do I list her as a dependent?

[Skyman 321]

3 minutes ago, devusr said:

I'm (US Citizen, Petitioner) is trying to understand the ITIN and Tax procedures for my wife (Sri Lanka citizen, beneficiary).

 

1) I want to get an ITIN number to add her to my bank account and such. Once I get an ITIN number, does this mean she has to file taxes with IRS?

2) She is unemployed and has no income. However, I remit money to her bank account every month or so to help pay for rent, food, and utilities etc. The rental lease for the house is under her father's name and I got this rental property before we were married (February, 2020). We got married April 2021. Based on this, what is the best tax filing option for us? Married filing jointly, Married filing separately, or head of household? Which is the easiest/less hassle? I don't want to have to mail her actual passport to IRS and take a chance on it being lost.

 

3) If married filing separately, does she need to file taxes?

 

4) On the tax return, I believe it asks the number of dependents I have (just from what I recall...not sure). If I'm married filing separately, do I list her as a dependent?

The ITIN can't be used for other than taxes so no bank accounts etc.  You have about 10 months before you need to file with her on your taxes so maybe she'll have a SSAN by then.  Unless you really need the deduction, I would wait until she has the SSAN even if it means filing single and amending later after she has the SSAN. If you do get her an ITIN you'll almost certainly do better filing married/joint.

[arken 4,197]

13 minutes ago, Skyman said:

The ITIN can't be used for other than taxes so no bank accounts etc.  You have about 10 months before you need to file with her on your taxes so maybe she'll have a SSAN by then.  Unless you really need the deduction, I would wait until she has the SSAN even if it means filing single and amending later after she has the SSAN. If you do get her an ITIN you'll almost certainly do better filing married/joint.

ITIN can be used to open bank accounts. Not all banks accept it but there are bunch of big name banks who accept ITIN.

 

Once married, one should not file as single.

 

To OP:

For ITIN, she will need to mail the passport or its certified copy issued by the same passport agency/department. If you don't want to go thru it, no need to do. Talk to your bank, may be you can add her as beneficiary if not as a joint account holder.

 

You can file Married Filing Separately for now and amend to Married Filing Jointly once she immigrates and gets her SSN. She doesn't need to file the tax return.

 

She is not your dependent for tax filing.

 

 

Edited July 7, 2021 by arken

[devusr 41]

23 minutes ago, arken said:

ITIN can be used to open bank accounts. Not all banks accept it but there are bunch of big name banks who accept ITIN.

 

Once married, one should not file as single.

 

To OP:

For ITIN, she will need to mail the passport or its certified copy issued by the same passport agency/department. If you don't want to go thru it, no need to do. Talk to your bank, may be you can add her as beneficiary if not as a joint account holder.

 

You can file Married Filing Separately for now and amend to Married Filing Jointly once she immigrates and gets her SSN. She doesn't need to file the tax return.

 

She is not your dependent for tax filing.

 

 

 

1) Once she immigrates, we will be filing jointly. However, is it a must that I need to really amend past returns??

 

[arken 4,197]

3 minutes ago, devusr said:

 

1) Once she immigrates, we will be filing jointly. However, is it a must that I need to really amend past returns??

 

It's not a must but a choice. If IRS refunds you loads of money by amending it to joint filing, wouldn't you do it? Depending on your income, you could get back few hundreds to few thousands of dollars once you amend it.

[Crazy Cat 41,855]

6 minutes ago, devusr said:

 

1) Once she immigrates, we will be filing jointly. However, is it a must that I need to really amend past returns??

 

Your taxes should accurately reflect your real marital status at the end of each year.

[Ontarkie 14,223]

~~Moved to Taxes and Finances, from IR1/CR1 P&P ~~

[Wuozopo 4,293]

On 7/7/2021 at 7:05 AM, devusr said:

I'm (US Citizen, Petitioner) is trying to understand the ITIN and Tax procedures for my wife (Sri Lanka citizen, beneficiary).

Are you asking about filing 2021 taxes next  year? You’ve already filed a 2020 return, right?  You apply for an ITIN when you file a return. You don’t get one separately without a tax return filing along with it that has her filing jointly with you. Otherwise she does not need an ITIN because she is not filing.  If you file Married Filing Separately, then she is not filing so no ITIN  application. If this is just about a bank account, then go into your bank and talk to someone in person and ask how they can help you. What is you main reason you want her to be joint on your account? Is it so she can have an ATM card and spend  money easier than you transferring? Talk to you banker about why she needs the account with you. 
 

On 7/7/2021 at 7:05 AM, devusr said:

She is unemployed and has no income.

Then filing jointly would definitely result in a better tax scenario for you. The standard deduction this year (2020 tax return) was $12,400 for one person filing, and 24,800 for 2 people on a joint return. That means you get to reduce your income by an extra 12,400 because she is a joint filer. She has no income to report so all $24,800 gets taken off your income before taxes are calculated. The higher your income the more it helps.

$26,000 income- save $1300 filing jointly

$50,000 income- save $1700 filing jointly 

$85,000 income- save $5000 filing jointly

 

On 7/7/2021 at 7:05 AM, devusr said:

If married filing separately, does she need to file taxes?

No because she is unemployed. No income, then nothing to tax. She is not a resident yet so is not subject to US income tax yet. She may choose to file jointly with you. 

 

On 7/7/2021 at 7:05 AM, devusr said:

If I'm married filing separately, do I list her as a dependent?

Dependents are typically your children. A spouse is never a dependent on a tax return. You would be asked to give her name on a MFS return but since she’s your spouse, she can’t be in the dependent section. 
 

On 7/7/2021 at 7:05 AM, devusr said:

Married filing jointly, Married filing separately, or head of household?

You wouldn’t qualify as Head of Household.  

MFJ  likely going to get you a bigger return or pay less taxes. But there is the hassle for getting her passport certified. There are “acceptance agents” that can certify her passport photocopy for a fee, but none in Sri Lanka. The agency that issues the passport might can certify.
MFS is the least hassle but you pay more tax. Don’t let any tax prep service or accountant tell you that you can file Single. You can always amend a MFS return once she has a SSN and get that tax savings back.

 

Maybe she will be here by the time tax filing rolls around.

 

[devusr 41]

14 hours ago, Wuozopo said:

Are you asking about filing 2021 taxes next  year? You’ve already filed a 2020 return, right?  You apply for an ITIN when you file a return. You don’t get one separately without a tax return filing along with it that has her filing jointly with you. Otherwise she does not need an ITIN because she is not filing.  If you file Married Filing Separately, then she is not filing so no ITIN  application. If this is just about a bank account, then go into your bank and talk to someone in person and ask how they can help you. What is you main reason you want her to be joint on your account? Is it so she can have an ATM card and spend  money easier than you transferring? Talk to you banker about why she needs the account with you. 
 

Then filing jointly would definitely result in a better tax scenario for you. The standard deduction this year (2020 tax return) was $12,400 for one person filing, and 24,800 for 2 people on a joint return. That means you get to reduce your income by an extra 12,400 because she is a joint filer. She has no income to report so all $24,800 gets taken off your income before taxes are calculated. The higher your income the more it helps.

$26,000 income- save $1300 filing jointly

$50,000 income- save $1700 filing jointly 

$85,000 income- save $5000 filing jointly

 

No because she is unemployed. No income, then nothing to tax. She is not a resident yet so is not subject to US income tax yet. She may choose to file jointly with you. 

 

Dependents are typically your children. A spouse is never a dependent on a tax return. You would be asked to give her name on a MFS return but since she’s your spouse, she can’t be in the dependent section. 
 

You wouldn’t qualify as Head of Household.  

MFJ  likely going to get you a bigger return or pay less taxes. But there is the hassle for getting her passport certified. There are “acceptance agents” that can certify her passport photocopy for a fee, but none in Sri Lanka. The agency that issues the passport might can certify.
MFS is the least hassle but you pay more tax. Don’t let any tax prep service or accountant tell you that you can file Single. You can always amend a MFS return once she has a SSN and get that tax savings back.

 

Maybe she will be here by the time tax filing rolls around.

 

 

 

Thanks for the extremely detailed response. I have one more question, "Filing Jointly"....does that mean she will need to file also? Does she need to do anything on her part? Or does it simply mean I only file and then I just list her name when it asks for spouse name?

[Wuozopo 4,293]

22 minutes ago, devusr said:

 

 

Thanks for the extremely detailed response. I have one more question, "Filing Jointly"....does that mean she will need to file also? Does she need to do anything on her part? Or does it simply mean I only file and then I just list her name when it asks for spouse name?

On a joint return, both spouses are equal filers. Both would provide their SSN or ITIN. Both would report their employment income, interest, dividends, etc. In your case, she has no income so all the figures will actually be just yours. Both would sign the return if it is a paper return. 
 

Which brings up the ITIN. She can’t be a joint filer without a SSN/ITIN. Therein lies the hassle of applying for the ITIN along with filing the return. If she was physically in the US, she could go to an IRS taxpayer assistance center or to a certifying acceptance agent . Finding help in Sri Lanka seems to be limited. She must go in person. You can’t do that part on her behalf. Or she can send her actual passport, which will be returned. 
 

A joint return while she still remains  outside the US with no ITIN, brief description—

A completed tax return (both sign)

A statement saying you both wish for her to be treated as a resident alien for tax purposes (both sign)

A completed  ITIN application (she signs)

Her ID (real passport or copy that has been certified)

All mailed to IRS office in Austin, TX. They process ITIN first, assign it to your joint tax return, then process the return. They mail you a paper giving you the ITIN number for future use.  They return the passport if that was submitted. 
 

Go to the IRS website and search for ITIN. Many details are there and other forms of ID. 

[devusr 41]

That is too complicated for our situation. The mail service in Sri Lanka is very bad, the chance of loosing her passport is huge.

 

If I file "Married filing separately", do I only need to file? Basically, what I want to do is avoid sending paperwork/documents from her side.

[Wuozopo 4,293]

2 hours ago, devusr said:

That is too complicated for our situation. The mail service in Sri Lanka is very bad, the chance of loosing her passport is huge.

 

If I file "Married filing separately", do I only need to file? Basically, what I want to do is avoid sending paperwork/documents from her side.

Yes, it is a big hassle when the spouse is abroad for a MFJ return. You would be sending her things to sign and mail back to you because it’s a paper return, plus her ITIN application signed, etc.

 

MARRIED Filing Separately has a small hitch. The 1040 form has a place at the top to put spouse’s name and SSN if you choose the MFS filing status. The IRS instructions  say if your spouse has no SSN/ITIN, then you can enter NRA (for Non-resident Alien) in the SSN spot.
 

The hitch: Most of the major tax software programs will not let you enter  NRA in that field. They will only accept numeric characters. So the work around is leave that field blank. Get everything else completed, then print out the return. Write in  NRA with a black pen, sign the return and mail the paper return to the IRS. One brand TaxAct will let you enter NRA and will print it out, but you still have to file by mail. E-filing will be rejected if there is not a valid SSN/ITIN in that spot or if it is left blank. The IRS computer will say “NO”. So it’s a slight bother not being able to e-file but not that bad. Paper filing by mail isn’t the end of the world. And your wife provides nothing and signs nothing because she isn’t filing a tax return. 

Edited July 10, 2021 by Wuozopo

[devusr 41]

16 hours ago, Wuozopo said:

Yes, it is a big hassle when the spouse is abroad for a MFJ return. You would be sending her things to sign and mail back to you because it’s a paper return, plus her ITIN application signed, etc.

 

MARRIED Filing Separately has a small hitch. The 1040 form has a place at the top to put spouse’s name and SSN if you choose the MFS filing status. The IRS instructions  say if your spouse has no SSN/ITIN, then you can enter NRA (for Non-resident Alien) in the SSN spot.
 

The hitch: Most of the major tax software programs will not let you enter  NRA in that field. They will only accept numeric characters. So the work around is leave that field blank. Get everything else completed, then print out the return. Write in  NRA with a black pen, sign the return and mail the paper return to the IRS. One brand TaxAct will let you enter NRA and will print it out, but you still have to file by mail. E-filing will be rejected if there is not a valid SSN/ITIN in that spot or if it is left blank. The IRS computer will say “NO”. So it’s a slight bother not being able to e-file but not that bad. Paper filing by mail isn’t the end of the world. And your wife provides nothing and signs nothing because she isn’t filing a tax return. 

 

This was very very helpful. Thank you very much!!!