[Susieque72]

Hi, I moved to the UK in September 2010. I had US income last year, but my spouse had no income for the whole year. Married filing joint seems to give me the best tax break in my case, but can I file this way and how? Any advice would be greatly appreciated.

[docbill]

Probably best to avoid if at all possible filing a tax return for your spouse. As soon as you file a joint return with your non-resident alien spouse, you subject yourself with possible huge penalties if you do it wrong. (Even if no taxes owing.) It is difficult enough to do your own taxes when living abroad, do you really want to spend endless nights worrying about whether your wife's foreign retirement plan's interest counted as income? Do you really want to declare her bank accounts to the US?

If you have a child, you probably qualify as head of household. The tax rate on that is almost as good as filing jointly. (See Publication 17 for the special rules on non-resident alien spouses.) Another thing to consider is sometimes you will owe less taxes if you don't file a form 2555. The reason being is form 2555 makes you exclude foreign taxes paid at a non-progressive rate. But you pay the least amount of taxes on that income. So if you find you paid a significant amount of foreign taxes try with and without the the form 2555 exclusion.

Unfortunately I did not know about the head of household rule until today. I made the mistake of filing joint returns with my non-alien spouse for the last couple of years. Now I must live in fear that I could have misinterpreted the rules for forms 90-22.1, 3250, 3250-A, 8938, etc. Even if I haven't misinterpreted the rules, I still at some point might have to prove that in tax court at a horrible expense.