Hi All,
I have a question regarding 1040NR as it is not entirely clear from the instructions whether or not we have to file for my wife or not.
My wife had self-employment income in Canada from clients in US and Canada. Her business ceased the moment we left Canada for US. Since moving to the US she had no income, nothing, zero from anywhere.
So with that info, does she have to file 1040NR? We are not US residents for 2015 income tax purposes. Of course, we will do her Canadian departure return for her self-employment.
If she does not have to file, I could claim her on my 1040NR as a dependent as technically for the whole stay in US in 2015 she was my dependent.
Please advise.
1040NR - file or not to file, that is a question
Moderator: Mark T Serbinski CA CPA
How are YOU filing? When did you move to US?
Any reason why you are not filing joint 1040 and exempting her and your pre-arrival earned income?
1040NR applies to the entire year, so if she had any US income for the entire year, then she has to file and you can't claim her as an exemption. Did she perform all this work for US clients while physically in Canada?
Any reason why you are not filing joint 1040 and exempting her and your pre-arrival earned income?
1040NR applies to the entire year, so if she had any US income for the entire year, then she has to file and you can't claim her as an exemption. Did she perform all this work for US clients while physically in Canada?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Thanks for your reply!
I'm planning on filing 1040NR because we moved to the US in late August of last year. We have no green cards and we do not meet substantial presence test.
My understanding is that I cannot elect to file as resident and I thought that there is no advantage to that as we have quite a bit of income from Canada combined. Maybe I misunderstand how this works. Also, I know that if we do 1040 I would have FBAR, FinCEN and all this other happy stuff.
Anyway, all the work performed by my wife was always while physically in Canada so all her income is attributed to Canada only.
Looking forward to your reply! :)
I'm planning on filing 1040NR because we moved to the US in late August of last year. We have no green cards and we do not meet substantial presence test.
My understanding is that I cannot elect to file as resident and I thought that there is no advantage to that as we have quite a bit of income from Canada combined. Maybe I misunderstand how this works. Also, I know that if we do 1040 I would have FBAR, FinCEN and all this other happy stuff.
Anyway, all the work performed by my wife was always while physically in Canada so all her income is attributed to Canada only.
Looking forward to your reply! :)
YEs, Cdn citizens are always allowed to file 1040. Always. A US citizen moving from Canada to US would file a 1040 and exclude Cdn earned income by 2555. You can too.
But, no, since she had no US income for 2015, she does not need to file 1040NR and you can use her exemption.
But, no, since she had no US income for 2015, she does not need to file 1040NR and you can use her exemption.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Hello and thanks again for replying...
This is interesting. I searched high and low and read the publication regarding foreign people and nowhere did I find anything that a Canadian citizen is allowed to file 1040 right of the bet. It is interesting because it might give me a more favorable net tax position. I would have to calculate that but I don't even know where to begin....
Either way I have the answer to my original question which was whether or not she has to file 1040NR to begin with. However, now I have more things to think about... :)
This is interesting. I searched high and low and read the publication regarding foreign people and nowhere did I find anything that a Canadian citizen is allowed to file 1040 right of the bet. It is interesting because it might give me a more favorable net tax position. I would have to calculate that but I don't even know where to begin....
Either way I have the answer to my original question which was whether or not she has to file 1040NR to begin with. However, now I have more things to think about... :)
Hello and thanks for answering.
I read article XXV of the treaty and an example that they provide. I think it kind of applies but I'm not 100% sure.
So my wife has a self-employment income in Canada and none from US. All her Canadian income was earned while we lived in Canada. I have some self-employment income from Canada and then all the rest is wages earned in both Canada and then in US after we moved. So far I believe article XXV applies and all is good.
However, then there is a statement in the article that states that I would have to be a Canadian resident for this to apply and this is where things get murky. I left Canada and this is going to be my departure return. After leaving Canada I am no longer a resident of Canada for tax purposes. Does this fact eliminate the application of article XXV? My gut feeling tells me that it does but it is not clear to me.
Can anyone explain?
I read article XXV of the treaty and an example that they provide. I think it kind of applies but I'm not 100% sure.
So my wife has a self-employment income in Canada and none from US. All her Canadian income was earned while we lived in Canada. I have some self-employment income from Canada and then all the rest is wages earned in both Canada and then in US after we moved. So far I believe article XXV applies and all is good.
However, then there is a statement in the article that states that I would have to be a Canadian resident for this to apply and this is where things get murky. I left Canada and this is going to be my departure return. After leaving Canada I am no longer a resident of Canada for tax purposes. Does this fact eliminate the application of article XXV? My gut feeling tells me that it does but it is not clear to me.
Can anyone explain?
Wrong part of the article. You are referring to par. 3 for Cdn residents. I'm referring to par. 1.
You might just want to read other threads on this. Nothing you are looking at is new to this forum. No real need to re-explain.
You might just want to read other threads on this. Nothing you are looking at is new to this forum. No real need to re-explain.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Thank you for your answer.
I looked through the forum and now I see how 1040 is an option but what is not clear to me is if I do 1040 alone just like any US citizen or if I file 1040NR using a tax rate from 1040 MFJ and attached to the whole return package.
Also it is not entirely clear to me how to fill out form 2555 for foreign tax exclusion should I choose to go with 1040 filing. The instructions are not clear for someone who used to live in a foreign country but now lives in the US and the foreign income is from the time when they lived in a foreign country...
I looked through the forum and now I see how 1040 is an option but what is not clear to me is if I do 1040 alone just like any US citizen or if I file 1040NR using a tax rate from 1040 MFJ and attached to the whole return package.
Also it is not entirely clear to me how to fill out form 2555 for foreign tax exclusion should I choose to go with 1040 filing. The instructions are not clear for someone who used to live in a foreign country but now lives in the US and the foreign income is from the time when they lived in a foreign country...
I guess you will need to study more, or have a tax preparer do your taxes. This is not a school, and these are basic mechanics of filing.
The 1040NR with MFJ rate doesn't apply to you, since you no longer live in Canada.
The 1040NR with MFJ rate doesn't apply to you, since you no longer live in Canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing