I live and work in Europe, visiting family in the United States a couple times a year, but otherwise a true "expat.” I got married in November of last year to a citizen of a European country (who doesn’t have U.S. citizenship or a green card), and honestly did not think at all about the potential implications of this for my U.S. taxes until I sat down to start working on them recently. How is my changed marital status going to affect my U.S. tax liability?
First, congratulations on the recent marriage, and second, bravo for your spot-on sense that your tax return may require special attention this year due to a change in marital status. That change, along with the fact that your spouse is a foreign citizen who isn't a resident in the United States, will indeed raise new considerations for you going forward.
You’ll need to determine your new status for tax filing, which can have a major impact on your ultimate tax liability. Since you were already married on the last day of the tax year in question, you actually do have a choice - you can definitely elect either “married filing jointly” or “married filing separately,” and if you happen to have a child or possibly a parent you support, you may have a third option: “head of household.” But since the first two sound more likely to apply to your situation, given the information you provided, we’ll focus on them.
The married-filing-jointly category has the advantage of affording certain deductions and credits that aren't available to filers in other statuses, including those in the married-filing-separately category. This is what people are referring to when they say there are tax benefits to marriage; the government incentivizes marriage by providing associated tax breaks.
But there’s a catch - if you go the married-filing-jointly route, all of your spouse’s income for the entire year (even money earned during the portion of the year before you got married) is generally subject to U.S. taxes. There are some exceptions that can that mitigate the impact of this, but there’s no getting around the fact that you will likely take a hit if your spouse is a big earner.
The married-filing-jointly status is accordingly usually preferred when the foreign spouse doesn’t make all that much money (because then you get the benefit of deductions/credits that married people get, but don’t have the downside of a bunch of additional income getting taxed). Furthermore, you may both be prohibited, should you file jointly, from claiming certain tax benefits afforded by tax treaties between your country of residence and the United States.
The married filing separately approach, then, means you don’t count your spouse’s earnings as income for U.S. tax purposes, but you also don’t get some of the tax benefits you would if you were to file jointly. If you go this route, your spouse will not need to file a U.S. tax return or otherwise have her income considered by the IRS at all.
Ultimately, you've just got to undertake the burdensome process of running the numbers under both scenarios to see which gives you a better deal. Some pretty complicated stuff is implicated in such an analysis - you may want to seek the help of a tax professional.