Tax Returns for Expats with Dependents

I have had a similar situation occur several times in my private practice where an individual is a U.S. Citizen, but his spouse and children are not. Naturally, the client will want to claim these dependents on his return. However, in order for the dependents to be claimed, they must have an ITIN. Don't worry - you can still file your taxes without them having ITINs. The trick is that once your return is prepared (you can self-prepare or hire an accountant, such as myself or many others with similar experience), you must send the W9 to the following address:

  • Internal Revenue Service
  • ITIN Operation
  • P.O. Box 149342
  • Austin, TX 78714-9342

I am also frequently asked about filing status for the household. Often times, the taxpayer will want to file "married filing joint." However, doing so will mean that the spouse must also disclose her worldwide income on the return. This may or may not be a problem, depending on how much income the spouse earns. However, the first $100,800 of income (in 2015) is excluded per spouse on form 2225 (foreign income deduction form). Any taxes paid to the foreign government can be used to offset (pro-rata) income over $100,800 using form 1116 (foreign tax credit form).

Alternatively, the taxpayer can file as head of household and list the spouse as a dependent. This way, income for the spouse would not have to be reported on the return.