need clarification ITIN??

faddii · Post by **faddii** » Wed Jul 22, 2015 7:49 pm

I am

* Canadian citizen with TN work visa commute to work in USA
* Married to a Canadian citizen and married filing joinly (form 1040EZ)

Please need clarification as to which REASON option for my wife to check on W-7 form???

A) Nonresident alien required to get ITIN to claim tax treaty benefit
B) Nonresident alien filing a U.S. tax return
C) U.S. resident alien (based on days present in the United States) filing a U.S. tax return
D) Dependent of U.S. citizen/resident alien
E) Spouse of U.S. citizen/resident alien
F) Nonresident alien student, professor, or researcher filing a U.S. tax return or claiming an exception
G) Dependent/spouse of a nonresident alien holding a U.S. visa
H) Other (see instructions)

Thanks

faddii · Post by **faddii** » Wed Jul 22, 2015 8:56 pm

I want to add that the reason I am asking is because wife's W7 form got rejected indicating failure to provide applicants Visa as per reason option G on W7 form. To my knowledge, she does not need to privde a Visa since she reside in canada and does not work in USA. What we provided was my Visa as understood in option G. The reasong my tax preparer used form 1040EZ affriming it is easier to prepare and noted down our canadian foregin country and address with married filing jointly. Dont know what to do. Please advice. Thanks.

nelsona · Post by **nelsona** » Thu Jul 23, 2015 8:46 am

befoe we look at the ITIN, let's talk about your choice of 1040.

By filing a 1040, youa re subjecting yourself top all the foreign reporting requirements, like FBAR, FATCA, 3520, etc, as well as reporting your and your spouse's Canadian income. Did your accountant do all this while trying to cut corners? Somehow I doubt it,

The proper way for someone in your situation to file is 1040NR, or, if 1040NR yields too high a taxrate (remember, you are only trying to lower your taxrate below your Cdn rate), any lower is a waste), a Article XXV(2) return, which we've expalined elesewhere.

So, ask your CPA about foreign reporting

W-7: Since you filed 1040 instead of 1040NR, the correct box to use is 'E', spouse of resident alien. By filing 1040, you declared yourself as a resident alien. No visa required.

faddii · Post by **faddii** » Thu Jul 23, 2015 11:04 am

Thank you Nelsona for your reply.

Yes before looking at the ITIN, the choise of 1040EZ was done by my new tax preparer. I insisted on the 1040NR. He claimed his choice of 1040EZ was okay since he uses this to help his commuter clients get their most refund. He also claimed that 1) an average person commuting to USA for the full year (for pleasure or work) and 2) since there is no limit on stay, would fall above the substancial presence test, hence his choice of 1040EZ. I was lead to trust in his work.

while a 1040NR would have been the proper way to file, I am thinking to proceed further to resolve this would be to write a letter explaining my situation and reiterating the reason to obtain an ITIN. Would this couse any further trouble? or do I leave things the way they are and do another W7 with the choice 'E', would this be valid? or do I wait to process the application and do an amendment later?

at this moment when checking for my refund status, they accepted me as 'SINGLE' and with status 'RETURN RECIEVED' only. Your help is appreciated greatly. Thank you.

nelsona · Post by **nelsona** » Thu Jul 23, 2015 1:43 pm

So many errors:
1. Commuters from canada and mexico do NOT count the days in which they leave US towrds SPT.
2. Getting the most refund is not a sound criteria. Paying the least tax is. And since you had to report foreign income, it was not the most simple return.
3. You are NOT single. You have filed illegally if this is trhe case.

I would let the W-7 take its course (using option E of course), or by having your spouse cross the border and get a TD.

And I would drop this bozo CPA today.

faddii · Post by **faddii** » Thu Jul 23, 2015 2:23 pm

I realize this has been a bad move that I need to take care of, I dont have hope in the CPA.

if letting W-7 take its course with option 'E', what consequences am I looking into? I was never a resident alien of USA during 2014 year. Will this ruin my situation further since I am a nonresident alien.

Could I file a 1040NR to correct this completely with an explination letter?

nelsona · Post by **nelsona** » Thu Jul 23, 2015 2:40 pm

If you field as single, why were you applying for ITIN for spouse?

I would NOT wait until 1040 is accepted before amending to 1040NR (since it is now hung up with the W-7 problem), you would do this with form 1040-X and attaching 1040NR with explanation that you shoudl not have filed 1040. This will get uyou off the hook for failing to report your Cdn assets, and for illegally filing single.

Ask for sa refund from your CPA.

faddii · Post by **faddii** » Thu Jul 23, 2015 2:51 pm

CPA did NOT file as 'SINGLE' on form 1040EZ. CPA filed 'MARRIED FILING JOINTLY' by indicating on line 5 of form 1040EZ $20,300 and completing the form with spouseâ€™s name and initials. That is how we proceeded to file for an ITIN for spouse since she does not have SSN. Will they accept my amendment in the meantime? I would really need to get off this erroneous case.

faddii · Post by **faddii** » Thu Jul 23, 2015 2:55 pm

I want to also say that when I tried to see the status on IRS website. It failed when selecting â€˜married filing jointlyâ€™ to proceed but it worked when I selected â€˜singleâ€™. That is how this â€˜singleâ€™ status came up about. I donâ€™t understand how they accepted â€˜singleâ€™ as the status.

nelsona · Post by **nelsona** » Thu Jul 23, 2015 3:10 pm

Your 1040 right now is missing a LOT of foreign things. You need to amend as quick as possible.

faddii · Post by **faddii** » Thu Jul 23, 2015 3:18 pm

Nelsona I appreciate your help and patience. Could you expand on why I am missing foreign things? W2 was attached along and I don't have dependants to claim.

nelsona · Post by **nelsona** » Thu Jul 23, 2015 3:28 pm

You live in canada, correct?
Your wife has a job?
You have a Cdn bank account?
You have RRSP?
You have investments in Canada?
You worked in canada before getting US job?

Answer YES to any of these questions and you have failed to report all your income and/or failed to report the existence of all your foreign accounts, each of which comes with interest and/or penalties and/or fines.

And, or couse, you are reporting all your US income in canada too, correct?

faddii · Post by **faddii** » Thu Jul 23, 2015 3:36 pm

1. Yes
2. yes in canada
3. yes
4. No
5. No
6. been working in USA since 07, before that yes

Yes all my US income is reported to canada.

nelsona · Post by **nelsona** » Thu Jul 23, 2015 4:32 pm

So, you have several violations.

So, how have you been filing in each year since 2007? 1040 or 1040NR.

faddii · Post by **faddii** » Thu Jul 23, 2015 9:21 pm

for the 2012 and 2013 my previous CPA did also 1040EZ claiming single in line 5. I was not presented with any issues. But I understand now what your saying as we are married filing jointly. For the reference of this discussion, I got married in August 2014.