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Does the resident spouse have to itemize when resident & nonresident spouses file separately?

Level 7

The IRS rule states that if one spouse itemizes deductions, the other cannot claim the standard deduction. This is designed to prevent couples from unfairly benefiting from both a large itemized deduction and the standard deduction, which isn't possible with joint filing.

However, in situations where one spouse is a U.S. resident and the other is a nonresident alien, and they decide to file separately, the nonresident alien spouse doesn't have the option to take the standard deduction. This scenario doesn't seem to confer the same unfair advantage the rule aims to prevent. Given this context, is the resident spouse still required to itemize their deductions?

PS: While I'm aware that these spouses have the option to file jointly by electing to treat the nonresident spouse as a U.S. resident for tax purposes, they prefer not to do so due to legal concerns.

PPS: I generally do not post non software specific questions only on taxprotalk forum, but we have some experts on nonresidents here who are not frequent on that forum, sorry for the folks who are on both.

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1 Comment 1
Level 15

If the US person's NRA spouse has no US tax filing requirement, there is nothing that stops that US person from claiming standard deduction.

If the NRA spouse has a US tax filing obligation, it most likely means that there's more than just FDAP subject to final withholdings and that there is probably US-ECI for which I/D may be claimed, however small that amount may be.

§63(c)(6)(A) clearly stipulates MFS spouses would not be eligible for S/D if either itemizes.  Subparagraph (B) then states that NRA's are not eligible for S/D.  If the Congress had intended anything different and that special considerations should be given to US persons with NRA spouses who are required to itemize, one would surmise that such a treatment would be codified.

At the end of the day, it is long established that federal income tax deductions are a matter of legislative grace.  If a taxpayer believes a deduction is allowable under the Code, the burden of proof is on the taxpayer.

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