Marriage & Taxes

Well, take the time to haul out those tax documents – if one of you is an American citizen (or otherwise obligated to file taxes in the US), then you will now have to prepare taxes for not just one, but two people – and getting familiar with each other´s financial situation – if you have not done it already – cannot begin too early. For recently married taxpayers, the tax consequences begin when the couple makes their vows. At the end of that first calendar year, taxpayers will be considered to be married – for the entire year.

Individual Taxpayer Identification Number

If you will be claiming exemptions for your spouse or dependents on your return, you will need to furnish either a social security number (SSN) or an individual taxpayer identification number (ITIN) for them. Generally speaking, the SSN is available only to those intending to work in the U.S. who also obtain authorization from Homeland Security. More likely, if you live in the Czech Republic and are simply intending to claim exemptions for your spouse or other dependents (a foreign-born child, for example, or your new spouse´s aging parent, who lives with you) on your returns, seek to make certain retirement investments on their behalf (say, US Government savings bonds), you will need to obtain an ITIN by filing Form W-7 with a current tax return.

The tax payer will submit form W-7 for their dependent together with a notarized copy of a current passport, or certified copies of two other documents such as a driver´s license, voter´s card, etc, providing evidence of identity and foreign status. In the Czech Republic notaries will not legally certify your passport; the American consulate in Malá Strana will certify a Czech passport for US 30. And note that you will send your return containing a W-7 to the ITIN Unit at the IRS – not the normal address. If you will qualify as a foreign-based taxpayer, you will have until 15 June to submit your documents on time. If this is still not enough for you, you will need to file for an additional 4-month extension.

When you submit a W-7 for a child, you will need to demonstrate they are your dependent – usually using a certified copy of a birth or adoption certificate or court papers (with certified translation!) showing legal guardianship. Be sure not to file the similar form called the W-7A, which is filed by parents adopting a US resident child and who are awaiting a US SSN for that child. To obtain an ITIN for foreign children, you must use the W-7 and you should file it with a current tax return, just as for your new spouse.

When you join in marriage you are usually also bringing your assets together; start collecting together the documents supporting those assets now. One of the first decisions will be whether to file married filing separately or jointly. You actually need to file an election statement the first time you file a joint return with a non-resident alien (your Czech spouse!). This election has nothing to do with love – it is all about how much tax you will pay. Especially if your new spouse is self-employed or has significant financial investments, it may be better to not make the election to file a joint return. Try to identify bank accounts, investments, self-employed business assets and the like as soon as possible.

One of the most challenging aspects of tax compliance after marriage is updating identification doucuments – mostly because of the time it takes as the various levels of identification are updated by a myriad of government agencies. Following a change in name, for example, your Czech bride will need to obtain a new Czech passport. That means a new US visa (Available from the US embassy for CZK 2.500). To get that document she will first need to change her citizen identification document. (Remember, you need to get a notarized copy of the passport in order to apply for the W-7!). If you will be adopting a Czech child, be aware that this will change his birth certificate, necessitating a change in his or her passport, too …

Discuss this article with our community
________________________________________
CFO2GO is an independent consultancy focused on assisting SMEs and their owners and executives to achieve their operating and strategic objectives when internal or alternative means of doing so are inadequate to the task. We seek to advance your corporate objectives by meeting your short-term needs and positioning you to take advantage of future opportunities. We are specialists in international personal taxation and would be pleased to speak with you.