Does non-US person spouse need to file anything?

I am a dual UK / US citizen trying to come into compliance.

I am married to non-US person (actually also not UK or EU, but with indefinite leave to remain in the UK and UK citizenship application pending).

I thought she should not have any obligations as she has no connection to the US system at all - has never lived or worked there.

I therefore planned to file as "married, filing separately" and just complete the return for myself.

But something I just read suggests that she needs to file a 1040NR. Is this really the case?

Is there any route I can take to file for myself without involving her at all? Actual tax efficiency doesn't really matter - as long as I can take the foreign earned income exception my income is so far below it (and non-earn income so far below even the smallest standard deduction) that I am pretty sure I would not have anything to pay.

If she does not own any US investments or have US source income there is no need for her to file.

Your spouse may need an ITIN for you to file 'married filing separately'. In past times, you could just write "NRA spouse" but that has changed. An ITIN does not mean your spouse has a filing requirement; it's for your return if you claim an exemption.

Read this: http://www.irs.gov/Individuals/General-ITIN-Information for starters and then go from there.

Read this: http://www.irs.gov/Individuals/General-ITIN-Information for starters and then go from there.

Thanks for the information! On that page it says that to apply for an ITIN she must submit a W7 with a return. But she will not be submitted a return so surely it is not necessary?

As I understand it, it would be filed with YOUR return if you file MFS and claim a NRA spouse exemption. But - it's been a while since I filed that way (DH is now a citizen but we live in the UK), so I'm not totally up on the rules.

You could elect to file jointly if this saves you tax or increases a refund - for example for the American Opportunity Credit.

If you want to claim an exemption for her she will need an ITIN.

My UK citizen husband applied for an ITIN earlier this year.  I posted about it then, and here's a link in case it may be of use to you: http://talk.uk-yankee.com/index.php?topic=79846.0

You definitely can file as married filing separately and not include her income (if any in the UK) on your return. You will need to show here name on box 3 of 1040, and write NRA (or non-resident alient) after her name. Also you must not claim her as a dependant.  You will not need to apply for an ITIN.

You probably already know that if it makes an impact to your bottom line tax (ie provide you with a lower tax), you have the option of making a claim to treat her as a US citizen for US tax purposes and therefore be able to file jointly and benefit from joint tax rates, higher standard deductions, etc....

Thanks very much - that matches what I understood.

I got the idea I didn't need to put her name from this:
http://britishexpats.com/wiki/Taxes_filing_with_the_US_IRS_in_London

but if its safer I will put her name with (NRA) after (and also put her name on the FBARs).

I understand I could get more exclusions filing jointly but I think I will have nothing to pay for the forseeable future anyway and I think she strongly prefers not to be involved in the US system at all!

To claim the NRA spouse exemption your spouse MUST have an ITIN per the Form W-7 instructions: http://www.irs.gov/pub/irs-pdf/iw7.pdf

File the paperwork; you may not have sufficient income to pay US tax now, but that could change, and the sooner you have the ITIN, the better IMHO.