📊 MFJ (With ITIN) vs. MFS (Without ITIN)
U.S. Taxpayer + Spouse Living Abroad (Nonresident Alien)
🧍♂️ Scenario:
| Taxpayer | Amount |
|---|---|
| U.S. Taxpayer Income | $60,000 (W-2) |
| Spouse | Lives in Mexico 🇲🇽 |
| Spouse Income | $15,000 (Foreign Earned) |
| Children | 2 (Both have SSNs) |
| Filing Status Option 1 | MFS (Spouse = NRA) |
| Filing Status Option 2 | MFJ (Spouse gets ITIN) |
❌ OPTION 1: Married Filing Separately
(No ITIN — spouse is treated as NRA)
- Standard Deduction (MFS): $14,600
- Taxable Income:
$60,000 – $14,600 = $45,400
Estimated Tax:
➡️ ≈ $5,200
Credits:
- ❌ No Earned Income Credit
- ❌ Limited Child Tax Credit
- ❌ No education credits
- ❌ No Dependent Care Credit
Estimated Child Tax Credit:
➡️ $2,000 total
🔴 Total Tax After Credits:
$5,200 – $2,000 = $3,200 Owed
✅ OPTION 2: Married Filing Jointly
(Apply for ITIN + Make 6013(g) Election)
Now you must report:
- U.S. income = $60,000
- Spouse foreign income = $15,000
Total Worldwide Income:
$75,000
Step 1: Apply FEIE (Form 2555)
Spouse qualifies for:
➡️ Foreign Earned Income Exclusion
Exclude:
$15,000 → $0 taxable
Step 2: MFJ Standard Deduction
$75,000 – $29,200 = $45,800
Estimated Tax:
➡️ ≈ $4,200
Credits Now Available:
✅ Full Child Tax Credit
➡️ $2,000 × 2 = $4,000
🟢 Total Tax After Credits:
$4,200 – $4,000 = $200 Owed
💥 FINAL RESULT:
| Filing Status | Tax Owed |
|---|---|
| MFS (No ITIN) | $3,200 |
| MFJ (With ITIN) | $200 |
💰 TAX SAVINGS:
$3,200 – $200 = $3,000 SAVED
📌 Client Advisory Takeaway
For many immigrant households:
Applying for an ITIN for a nonresident spouse can unlock MFJ status, restore lost credits, and reduce tax liability by $2,000–$5,000+
Even when the spouse has foreign income —
➡️ FEIE or FTC can neutralize the added income
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