[jkimmy]

Hello,
I am a U.S. citizen, newly married to a French national working as a consultant for an international organization. He holds a G-4 visa, which exempts him from paying taxes in the U.S. Should I be filing as married filing jointly or married filing single? I also have graduate student loans which I would like to claim tax deductions for. As well, I've recently purchased a condo (purchased while single, in summer 2009), and I would like to claim the first time home buyers tax credit. If I did file as married filing jointly, as he is a G-4 visa holder, would we need to include his consulting income, which is, under the G-4 visa, consider tax-exempt? Any guidance is greatly appreciated. Thank you!

[Five Rings]

Your husband's income is exempt from tax under sec. 893 of the IRS Code. He is considered a nonresident alien.
Thus, you will file as Married Filing Separately. Because of this filing status you may not claim the student loan deduction.

[AtlantaTaxExpert]

However, you CAN claim his personal exemption on YOUR Married Filing Separately tax return.

[Five Rings]

Just so ATE, my fault for not mentioning that.

[jkimmy]

Thanks, ATE and FR. How about filing jointly but designating on my forms his non-taxable revenue? What makes the most sense, regarding my particular case?

[Five Rings]

Look, your spouse is getting all his income tax free. Figure the tax on his income and then figure what you are losing by filing MFS.

I believe you will find that you come out ahead by filing as I suggested.

He is nonresident. You may not file jointly unless he elects to be treated as resident. Bad idea.

[AtlantaTaxExpert]

Agreed; if you file jointly, he MUST file as a resident, which makes his salary taxable regardless of what the tax treaty allows.

[rit092769]

Hello all! I have a similar situation as jkimmy. I'm a g4 visa holder and just married to a us citizen. I was told that we can file jointly but in the form my income shows "0" and he can claim me as a dependent spouse. Any comments on this.

[rit092769]

Follow up on my previous question - what do you mean by "claim his personal exemption on YOUR Married Filing Separately tax return".

[Five Rings]

Told by whom?

If you file jointly you must obtain an ITIN and then elect to be treated as a US resident for tax purposes under sec. 6013(h); goodbye exempt tax status.

He can still claim the spousal exemption for you because you are considered a nonresident alien with no gross income (your income is exempt). If you have kids or other qualified dependents he can file "head of household"

[Five Rings]

If you file OTHER than Married filing jointly you may still claim the spousal exemption. See sec. 151(b) as below

(a) Allowance of deductions
In the case of an individual, the exemptions provided by this section shall be allowed as deductions in computing taxable income.
(b) Taxpayer and spouse
An exemption of the exemption amount for the taxpayer; and an additional exemption of the exemption amount for the spouse of the taxpayer if a joint return is not made by the taxpayer and his spouse, and if the spouse, for the calendar year in which the taxable year of the taxpayer begins, has no gross income and is not the dependent of another taxpayer.

[rit092769]

Thank you for your response, Five Rings. What do you mean by "claim the spousal exemption"? Will he have less taxes to pay then?

[Five Rings]

One more thing. If you wish to claim the spousal exemption the spouse must obtain a ITIN.

See other threads for the Form W-7 and process.

[Five Rings]

No, it is you who will pay less tax because you are the one filing. He owes no tax because his income is exempt.

You will be filing either Married Filing Separately or Head of Household depending on your circumstances.

[AtlantaTaxExpert]

Agreed; do NOT file jointly. File Married Filing Separately so your husband retains his tax exempt status.

[phoogenb]

The tax professionals who say that filing jointly will cause your husband's income to become taxable are INCORRECT. I am a US citizen; my wife is a foreign national in the country on a G4 visa, working for a UN agency. We file jointly, and we do not pay tax on her income.

[AtlantaTaxExpert]

Did you submit Form 8833 with that return to explain the exempt income?

If so, what was your IRC citation?

[gajoguy]

As phoogenb says, I think that G4 visa holders (non-residents) who are married to US citizens or US permanent residents can file married filing jointly and not pay income tax on their earned income from international organizations that have tax treaty exemptions (e.g. UN, World Bank). While I am not a lawyer and have some difficulty understanding tax legalese, I would refer interested parties to IRS RR 79-246:
"Joint returns; nonresident alien; exempt status of income. An election to
file a joint return under section 6013(g) of the Code is not a waiver of
the privileges provided by section 893(a) of the Code and section 247(b) of
the Immigration and Nationality Act that affects the tax exempt status of
the income of a nonresident alien married to a U.S. citizen. "

[AtlantaTaxExpert]

I recently learned that there IS a special election for G-4 visa holders who are married to U.S. citizens.

Under that exemption, they CAN file a joint tax return, but they must submit a statement that states that they are claiming that election.