Introduction: The Section 6013(g) Election Is Rarely the Bargain It Looks Like
The Section 6013(g) election allows an American to treat a British spouse as a US tax resident, unlocking married-filing-jointly status on Form 1040 — and it is one of the most expensive mistakes wealthy cross-border couples make. On paper the arithmetic looks appealing. Married filing jointly carries a $32,200 standard deduction for 2026 against $16,100 for married filing separately, and the joint brackets are wider at every level. Consequently, software and generalist preparers push the election almost automatically.
However, the trade is far worse than it appears. The Section 6013(g) election does not buy a filing status for one year. Instead, it pulls your British spouse into the US tax system permanently, exposes her worldwide income and investments to the Internal Revenue Code, and — if you ever unwind it — bars the two of you from ever electing again. For a couple where the British side holds ISAs, UK funds, or shares in a private company, the cost routinely runs into tens of thousands of dollars in the first year alone.
Furthermore, most published guidance on this topic is thin, out of date, or simply wrong on two critical points: what the election does to the Net Investment Income Tax, and what it does to FBAR. At TaxYork we run this analysis for high-net-worth couples across London and the Home Counties every filing season. Below, we set out exactly how the election works, what it costs, and the narrow circumstances in which it genuinely pays.
What the Section 6013(g) Election Actually Does in Law
The Section 6013(g) election sits in 26 U.S. Code § 6013(g). Its effect is precise and narrower than most readers assume. A nonresident alien covered by the election is treated as a resident of the United States for purposes of chapter 1 — the income tax — for the whole of the taxable year, and for purposes of chapter 24, which governs wage withholding.
Notably, that is the entire statutory reach. The election says nothing about chapter 2A, which contains the Net Investment Income Tax. Additionally, it says nothing about the Bank Secrecy Act, which governs FBAR. Those two omissions drive most of the planning, and we return to both below.
The regulation at 26 CFR 1.6013-6 fills in the mechanics. Both spouses must be married at the close of the taxable year. One must be a US citizen or resident; the other must be a nonresident alien. Once made, the election runs for that year and every subsequent year until it is suspended or terminated.
How You Make the Election
You make the Section 6013(g) election by attaching a signed statement to a joint Form 1040. The statement must declare that the election is being made, name both spouses, give each spouse's address and taxpayer identification number, and confirm that one spouse was a nonresident alien and the other a US citizen or resident on the last day of the year. Both spouses must sign it.
Your British spouse will also need a taxpayer identification number. Since she has no Social Security Number, she must apply for an ITIN on Form W-7, filed with the return, supported by original or certified copies of her passport. Alternatively, a Certifying Acceptance Agent in the UK can verify her documents so that her passport never leaves the country. In our experience, the agent route is worth the fee — HMRC-issued replacement documents take months if anything goes astray.
Section 6013(h) and the Year You Both Arrive
A related provision, section 6013(h), covers the year in which a nonresident alien becomes a US resident partway through the year. It permits a full-year joint return for that transition year only. Crucially, section 6013(h) is a one-year election rather than an evergreen one, so it does not carry the permanent exposure that the Section 6013(g) election creates. Couples relocating to New York or Boston should check which provision genuinely applies before signing anything.
The Real Cost of the Section 6013(g) Election: Worldwide Income
The headline consequence is simple to state and expensive to live with. Once the Section 6013(g) election is in effect, your British spouse's worldwide income enters the joint return. Her salary, her rental profits, her dividends, her capital gains, and her bank interest all become US-taxable, subject to foreign tax credit relief for the UK tax she pays.
For a spouse with modest earnings and nothing but a current account, that is manageable. For a British professional with real wealth, it is not. Specifically, the problem is not the income tax — the foreign tax credit usually absorbs most of it, because UK rates exceed US rates at the top. The problem is the anti-deferral machinery that switches on the moment she becomes a US person.
ISAs, OEICs and the PFIC Problem
Britain's most popular savings wrapper is a US tax disaster. An Individual Savings Account receives no US recognition whatsoever, whatever its UK tax-free status suggests. Therefore, the IRS treats it as an ordinary taxable account, and every UK-domiciled fund inside it is a Passive Foreign Investment Company.
PFICs default to the punitive section 1291 excess-distribution regime. Under it, gains and distributions are spread back over the holding period, taxed at the highest ordinary rate for each year, and then charged interest as though the tax had been underpaid all along. Additionally, each fund demands its own Form 8621. A British spouse with a fifteen-year ISA history and a diversified OEIC portfolio can easily generate twenty separate filings in the first year of a Section 6013(g) election.
UK Company Shares, Form 5471 and NCTI
The position worsens if your spouse owns a UK trading company. Before the election she is simply a British shareholder in a British company. Afterwards she is a US shareholder, and if she holds more than half the shares that company becomes a controlled foreign corporation overnight.
Consequently, she owes Form 5471 as a Category 4 and Category 5 filer, with a $10,000 penalty per form per year for failure. Moreover, she picks up a Net CFC Tested Income inclusion — the successor to GILTI following the 2025 reconciliation legislation — taxed at an effective 12.6% after the 40% deduction. A profitable consultancy she built herself, entirely within Britain, suddenly generates a US tax bill.
The Information-Return Stack
Beyond PFICs and CFCs, the Section 6013(g) election switches on the full international reporting apparatus for a person who has never set foot in the American tax system. Form 8938 for specified foreign financial assets, Form 8865 for UK partnership interests, Form 926 for transfers to foreign corporations, and Form 8858 for foreign disregarded entities all become live. Each carries its own penalty regime, and each starts a fresh statute of limitations that stays open until the form is filed correctly.
The NIIT Trap the Section 6013(g) Election Creates
Here is the point almost every competing guide either misses or gets backwards. The Net Investment Income Tax lives in chapter 2A, and section 6013(g) reaches only chapters 1 and 24. Therefore, making the Section 6013(g) election does not, by itself, make your British spouse a US resident for NIIT purposes.
Why the $125,000 Threshold Survives
The regulation at 26 CFR 1.1411-2 is explicit. Where one spouse is a US citizen or resident and the other is a nonresident alien, the spouses are treated as married filing separately for section 1411 purposes. Accordingly, the American spouse computes his own Net Investment Income Tax against the $125,000 married-filing-separately threshold, not the $250,000 joint threshold — even though the couple filed a joint income tax return.
That surprises people. You file jointly, you report jointly, and then Form 8960 quietly reverts to separate treatment with a threshold half the size. Nevertheless, the nonresident spouse's investment income stays outside the NIIT base entirely, which is a genuine benefit.
The Separate Section 1411 Election, and Why You Should Usually Decline It
Regulation 1.1411-2(a)(2)(i)(B) offers a fix. A couple who has made the Section 6013(g) election may make a further, separate election to apply that election for chapter 2A as well. Doing so combines both spouses' net investment income and unlocks the $250,000 joint threshold.
For most wealthy couples, however, that trade is plainly bad. The threshold is measured against modified adjusted gross income, and a London banking or private-equity income blows through both thresholds regardless. Consequently, the extra $125,000 of headroom is worth nothing, while the British spouse's entire portfolio joins the 3.8% base. In our experience, high-earning couples who have already made the Section 6013(g) election should decline the section 1411 election in almost every case.
What the Section 6013(g) Election Does Not Reach: FBAR and Form 8938
Two reporting questions come up constantly, and the published answers are frequently wrong. Specifically, many guides state that the election drags a British spouse into FBAR. It does not.
FinCEN Ignores the Election Entirely
FinCEN determines who counts as a United States person for FBAR purposes without regard to elections under section 6013(g) or 6013(h). That position appears in the preamble to the FBAR regulations and is repeated in IRM 4.26.16. Therefore, a British spouse who elects US-resident treatment for income tax acquires a Form 1040 obligation and no FBAR obligation at all.
That has a practical consequence couples miss. Because she has no report of her own to file, she cannot be included on a combined Form 114a filing. Her accounts still appear on your FBAR to the extent you hold signature authority or a financial interest, but she remains outside the regime herself. Furthermore, the Section 6013(g) election cannot cure a delinquent FBAR history on her side, because none ever existed.
Form 8938 Thresholds Actually Improve
Form 8938 moves the other way, and here the election genuinely helps. An American living abroad and filing separately reports specified foreign financial assets once they exceed $200,000 on the last day of the year or $300,000 at any point. Filing jointly from abroad doubles those figures to $400,000 and $600,000.
Additionally, there is a counting rule that favours the election. Under the Form 8938 instructions, when spouses file separately and both are specified individuals, each counts only half of a jointly owned asset. When the joint owner is a spouse who is not a specified individual, you count the entire value. So a British wife outside the US system makes your separate-filing threshold harder to stay under, while the Section 6013(g) election raises the ceiling and halves the counting. That is the strongest single argument in the election's favour, and it is rarely enough on its own.
The One-Way Door: How the Section 6013(g) Election Ends
Wealthy couples treat filing elections as reversible. This one is not, in any meaningful sense.
The Four Termination Events
Section 6013(g)(4) terminates the election at the earliest of four events. Either spouse may revoke it by filing a statement of revocation before the due date of the return for the first year it is to stop. Death of either spouse terminates it, subject to a limited surviving-spouse exception. Legal separation under a decree of divorce or separate maintenance terminates it. Finally, the Secretary may terminate it where either spouse fails to keep adequate books or supply information, under section 6013(g)(5).
Section 6013(g)(6) and the Permanent Bar
Now the sting. Section 6013(g)(6) provides that where an election is terminated for any taxable year, those two individuals are ineligible to make the election again for any subsequent year. Not for five years. Ever.
Consequently, a couple who elects in 2026, discovers the PFIC bill, and revokes in 2027 has permanently forfeited joint filing for the rest of their marriage. Meanwhile, a couple who separates and later reconciles is in the same position. Before making the Section 6013(g) election, therefore, model at least a decade forward — including the year your spouse inherits, sells her company, or receives a large share award.
Recordkeeping Termination Is a Real Risk
The recordkeeping ground deserves attention because it is not theoretical. If your British spouse declines to hand over her UK bank statements, pension records, or company accounts during an examination, the IRS can terminate the election unilaterally — and the permanent bar in section 6013(g)(6) then applies. Ultimately, the election only works where both spouses accept lifelong US disclosure.
A Worked Case Study: A London Couple and the Section 6013(g) Election
Consider an illustrative couple we would recognise immediately. James is a US citizen and a managing director at a London investment bank, earning £310,000 in salary and bonus. Eleanor is British only, has never lived in America, and earns £185,000 as a portfolio manager. She holds £640,000 across ISAs and UK OEICs built up over fifteen years, plus 55% of a consultancy she founded.
Under married filing separately, James converts his £310,000 at the Treasury's 2025 year-end rate of £0.743 to the dollar, giving $417,200. His UK tax of roughly £132,000 produces $177,700 of foreign tax credits, which extinguishes the US tax on his employment income entirely. His only US liability is 3.8% NIIT on $48,000 of US-source dividends and gains, or $1,824. Eleanor files nothing.
Now apply the Section 6013(g) election. The extra $16,100 of standard deduction is worth precisely nothing, because the foreign tax credit had already reduced his liability to zero. Likewise, the wider joint brackets deliver no saving for the same reason. Meanwhile, Eleanor's £640,000 of ISA and OEIC holdings enter the section 1291 regime, and unwinding fifteen years of deferred gain produces roughly $62,000 of tax and interest across nineteen separate Forms 8621.
Furthermore, her consultancy becomes a controlled foreign corporation. An NCTI inclusion of about $105,000 at the effective 12.6% rate adds $13,200, alongside Category 4 and Category 5 Form 5471 filings. Had they also made the section 1411 election, Eleanor's investment income would have added a further $2,352 of NIIT.
The Section 6013(g) election therefore converts a $1,824 US tax bill into roughly $77,000, before professional fees, and locks in permanent US exposure for a woman who has never held an American passport. These figures are illustrative, but the shape of the answer is one we see repeatedly in US-UK tax return preparation for banking and fund clients.
When the Section 6013(g) Election Genuinely Pays
Having made the case against, we should be fair about when the election works. There is a real, if narrow, set of circumstances in which it produces a clear win.
The Low-Income or Non-Working Spouse
The classic case is a British spouse with little or no income and no investments beyond a current account. Here, the Section 6013(g) election delivers the full $32,200 standard deduction and the wider brackets while adding almost nothing to taxable income. Additionally, the couple gains the higher Form 8938 thresholds. Where the American spouse has US-source income that the foreign tax credit cannot shelter, the saving is genuine and can reach several thousand dollars annually.
The Head of Household Alternative
Before electing, check whether you qualify for head of household instead. The IRS confirms that an American married to a nonresident alien may use head of household rates provided the spouse was a nonresident at some point in the year and you do not elect resident treatment. Your spouse never counts as the qualifying person, so you need a qualifying child or dependent relative. Nevertheless, head of household gives you a $24,150 standard deduction for 2026 and better brackets than separate filing, with none of the permanence of the Section 6013(g) election.
The Foreign Earned Income Exclusion Route
Where your British spouse does work, remember she can claim her own exclusion once the election is in effect. The foreign earned income exclusion rises to $132,900 for 2026, with a base housing amount of $21,264. A UK-resident spouse satisfies the physical presence test comfortably. Consequently, a British spouse earning under about $132,900 may add little or no US tax, which materially improves the arithmetic — though it does nothing for the PFIC exposure.
The UK Side: HMRC Does Not Care
One point reassures clients. Britain taxes individuals independently, so nothing you elect in America changes your HMRC position. There is no UK equivalent of joint filing, and the Marriage Allowance is unavailable to higher-rate taxpayers in any event. The Section 6013(g) election is purely a US-side decision, though it interacts closely with treaty planning under the US-UK income tax treaty.
How TaxYork Can Help With the Section 6013(g) Election
We model this decision properly rather than defaulting to whichever status the software prefers. Specifically, we build a multi-year comparison of separate filing, head of household, and the Section 6013(g) election, incorporating your spouse's PFIC portfolio, company interests, and expected liquidity events.
Furthermore, we handle the mechanics: the election statement, the ITIN application through a Certifying Acceptance Agent, the Forms 8621 and 5471, and the coordination with your FBAR and FATCA reporting. Where an election was made in error in a prior year, we advise on revocation and on the consequences of the permanent bar.
Additionally, our tax treaty optimisation work ensures that credits, re-sourcing, and pension positions are claimed correctly on the joint return. Where a couple has missed US tax returns or missed FBAR filings, our IRS Streamlined Filing team brings the American spouse current before any election is considered. Longer-term structuring sits with our cross-border planning specialists.
Conclusion
The Section 6013(g) election is a genuine planning tool, but it is not a filing-status convenience. It is a permanent commitment that hands the IRS jurisdiction over a British spouse's worldwide income, investments, and companies, and section 6013(g)(6) ensures that the door only closes once.
For couples where the British spouse has little income and few assets, the election frequently pays. For high-net-worth couples with ISAs, UK funds, private company shares, or a foreign tax credit position that already eliminates the US bill, it usually destroys value on a spectacular scale. Therefore, model the decision across a decade before you sign the statement, and revisit it whenever your circumstances change.
Contact Us
Deciding whether the Section 6013(g) election suits your circumstances requires a full picture of both spouses' income, assets, and plans. Our team prepares US and UK returns for high-net-worth individuals, investors, and business owners across Britain. To discuss your position, book a consultation with our specialists. Email hello@taxyork.com or call 020 3488 8606.
Disclaimer
This article provides general information about US and UK tax rules and does not constitute tax advice for any specific person or situation. Tax legislation, thresholds, and exchange rates change frequently, and the figures in the case study are illustrative only. You should obtain professional advice tailored to your circumstances before making or revoking any election. TaxYork accepts no liability for action taken or omitted in reliance on this article.