Wife's H4 is Pending. I am on H1B effective Oct 1 2019. Can I withhold taxes as 'Married'?

Question

My Visa status changed from F1 to H1B effective Oct 31st this year. My wife came to USA in May 2019 on F2 Visa. Her H4 application is still in process and her F2 is invalid effective Oct 31st.

I wanna know if I can withhold taxes on W-4 by choosing options as shown in the picture below. If pictureis not visible, the portal allows me to choose 'Married Filing Single' option as 'No' only when I select 'Married'. So, it looks like it's just 'Married' for me on my W-4.

Can I opt for this when I am on H1B but my wife's H4 application isn't approved yet?

Also, does this mean my filing status will be 'Married filing Separately' when I file taxes in early 2020?

We went for her fingerprinting last week and are waiting for updates. Also, it seems I am an NRA since I was on F1 before Oct 1 only for 3 years and my H1B just started last month and hence I do not statisy the Substantial Presence Test.

Last question, should I apply for ITIN when I file for taxes? (assuming her H4 gets approved)

Your help is appreciated.

Picture Link: https://i.sstatic.net/AfDdC.png

Answer 1

Big picture, choosing your withholding here is the government asking you to ensure you pay-as-you-go. That is, as you earn money, the government is asking you to pay your fair share of taxes as you earn that money.

The goal here being come next March when you complete the 2019 tax forms, the amount calculated that you owe to the government is 0 or less. (The amount you owe here being: the amount of taxes on your total income in 2019 minus the total you paid in.) 'Or less' included in that previous sentence here noting that you may have overpaid during the year and are entitled to a refund.

With that philosophy, my suggestion here would be, at this moment, to ask them to withhold as if you are single. This will withhold more taxes in each paycheck right now (because the tax tables for married and single people are different). However, the worst that can happen is that you overpay some during the year, but get the amount overpaid returned to you as a refund next spring.

This is far better than attempting to withhold too little, as if you end up owing the government too much, there is the possibilities of penalties for not-paying-enough-as-you-go. In my opinion, better to err on the side of paying in too much and getting a refund rather than risk the underpayment penalties.

Furthermore, when the question about your spouse's visa is settled, you can then always come back later and refile the W-4 to reflect that settled status.

The simple truth is that W-4 is not a document asking you to accurately report your marital status. The W-4 is a document asking you to make sure you are withholding enough taxes in each paycheck to get that 'amount you owe' as close to 0 as possible. To wit, I have filled out that form as 'single' my entire life, whether I am single or not exactly for the reasons given above -- I think it is better to withhold more than not enough.