A married US taxpayer may elect to file their annual US tax returns either jointly with their spouse or may prefer to keep their tax affairs separate and file on the ‘Married Filing Separately’ (MFS) basis.
A significant number of taxpayers were caught out with their US federal tax filing obligations for the 2018 tax year due to unawareness of the changes introduced within the Tax Cuts & Jobs Act of 2017 (TCJA).
Prior to 2018, a married US taxpayer whom opted to choose the MFS basis of taxation, would not be required to file a federal Form 1040 with the IRS should their gross income amount to < $4,050.
This filing threshold was significantly reduced or effectively ‘suspended’ within the TCJA of December 2017. The IRS requests an individual US taxpayer who chooses to the MFS basis of taxation and gross income is greater than $5 is required to file a Federal Form 1040 for the 2018 tax year and onwards.
Simply having earned £8 of interest income within a jointly held bank account will constitute a Federal tax filing requirement for 2019!
The TCIA of 2017 shows a more stringent approach from the IRS targetting overseas US taxpayers married to non-US citizens to report their worldwide income and file a federal tax return - even when the annual income is minimal.
Kush Shah
