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How to file state return with MFS status while spouse has no Tax ID?

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Level 1

John and Mary are married nonresident living abroad. John has a rental house in the U.S. has ITIN but Mary does not to file return and has no ITIN. I have the following questions:

[1] Why state E-file with MFS status requires spouse tax ID? John file 1040-NR with the filing status "other married nonresident". Since John is married, he has to file MFS on state, no?

[2] Is there a workaround for the E-file restriction besides paper filing?

[3] If answer is no for [2], is it possible to apply for ITIN for Mary just for state E-filing? Mary has no other reason to obtain ITIN since she does not need to file and nonresidents cannot file jointed.

[4] If I have to file on paper, what is the best way to get confirmation that they have received and accepted the return when there is no tax owed and no refund. I am thinking to add a donation, but want to know if this is a good idea. If the return filed late, and donation is considered tax owed and will be charged penalty and interest?

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Highlighted
Level 15

The spouse must have an ITIN in order for the return to be e-filed.  Otherwise, the return will need to be filed on paper.

The return can be delivered electronically to your client, so that he can print and file it according to the instructions you provide.  They should also file the return using approved PDS so that his record of mailing may be recognized for US tax purposes.

No interest or penalty may be assessed if there is no tax due on the return.

P.S. As you may be aware, rental income is taxable to NRAs on a gross instead of net basis unless an election is made.  And NRAs are subject to FIRPTA.

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Still an AllStar

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8 Replies 8
Highlighted
Level 15

The spouse must have an ITIN in order for the return to be e-filed.  Otherwise, the return will need to be filed on paper.

The return can be delivered electronically to your client, so that he can print and file it according to the instructions you provide.  They should also file the return using approved PDS so that his record of mailing may be recognized for US tax purposes.

No interest or penalty may be assessed if there is no tax due on the return.

P.S. As you may be aware, rental income is taxable to NRAs on a gross instead of net basis unless an election is made.  And NRAs are subject to FIRPTA.

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Still an AllStar

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Highlighted
Level 1
[1] Can spouse obtain an ITIN even she does not need to file tax? [2] Is there a way to obtain a record that the tax authority has processed the return besides that the taxpayer has mailed the return? [3] The tax forms have options to add donation, does the tax authority knows the difference between the tax owed and donation amount so that the donation is not charged interest and penalty? If the check is cashed then it is an indication that the return has been processed.
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Highlighted
Level 15
[1] Technically no.  See W-7 instructions, which summarizes the conditions prescribed in the regulations.
[2] If there's a refund, can check status of refund online.  Otherwise, call the IRS.
[3] Why would they not know?  BTW, donation for presidential campaign does not require extra tax payments; it comes from the taxes owed.
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Still an AllStar
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Highlighted
Level 15
For {2{. Get a POA Form 2848 from the client. Submit it to the IRS. After sufficient time, go to eservices and you can get a record of the account which will show it was processed.

ex-AllStar
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Highlighted
Level 15
Some tax software allows "Nonresident Alien" in the spouse SSN field, so IRS must allow it. Maybe the state will, too?

ex-AllStar
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Highlighted
Level 1
@sjrcpa I believe the IRS does not require the spouse tax ID since 1040NR cannot jointly filed, but the state requires spouse tax id (for example, VA) when it is MFS. I would think it is better to apply for ITIN for spouse as well using the "other" reason, they need ITIN for bank withholding per tax treaty purpose as well.
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Highlighted
Level 15
You are correct re the spouse ID number on the 1040NR. Other tax software allows Nonresident Alien in the SSN/ITIN field on the 1040. Therefore I hypothesized that a state would accept it, too.
I agree it may be better to apply for the ITIN using "other". Good luck with it.

ex-AllStar
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Level 15
1040NR does not require spouse's TIN.  Neither does VA unless the taxpayer and spouse are filing jointly, which would not be the case since the taxpayer is filing a 1040NR.
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Still an AllStar
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