Marriage to a Mexican National: The Taxman Watches
By Orlando Gotay
If you’re a US citizen expat in Mexico, it’s possible you may meet and consider marrying a Mexican national. ¡Orale! as they say. Yet it’s important to understand that there will be US tax consequences and choices to be made when marrying a non-US citizen when both of you reside outside the United States.
If you marry a “non-resident alien” and do nothing else, you’ll be required to file returns at the “married filing separate” rates, which are usually very inconvenient. Generally speaking—and there are exceptions—you will end up paying more tax this way.
Both spouses can elect to have the non-resident alien treated as a “resident alien” for US income tax purposes. In this case, “married filing joint” status is available. However, with the IRS, nothing is free. In addition to the income of the US citizen spouse, the joint return must include the other spouse’s worldwide income. For those who marry often, beware that this election can only be made once. It can be revoked, but once elected, neither spouse can elect it again. In addition, of course, the non-US citizen spouse must get an individual tax identification number, or ITIN, always a fun endeavor outside the United States. Of course, that person’s income and possible deductions, now and in the future, (in addition to those of the US citizen spouse) are key to deciding if this is a worthwhile election to make. It’s also important to know that the election forgoes any US-Mexico tax treaty benefits that may be otherwise available to a resident of Mexico.
Some marriages bring additional people, such as parents and preexisting children, into the picture. Instead of taking the election or using the “married filing separate” status discussed above, the more favorable “head of household” status may be an option if support tests are met. In some cases, the relatives have to live in one’s household.
Lastly, timing is everything. It’s important to know that filing status is determined as of the end of the tax year, usually December 31. Depending on individual circumstances, it may be advantageous to marry in one year or the next. I always tell people to run their numbers.
Marriage is, of course, a major milestone. It brings about significant tax consequences that are magnified when one marries what the IRS calls a “non-resident alien.”
Orlando Gotay is a California-licensed tax attorney (with a Master of Laws in Taxation) admitted to practice before the IRS, the US Tax Court, and other taxing agencies. His love of things Mexican has led him to devote part of his practice to the tax matters of US expats in Mexico. He can be reached at firstname.lastname@example.org.