Hi,
I am a CDN citizen and will getting married to a US citizen very soon. I live and work in Manitoba and she lives and works in California. I thought i had figured out what was going to be required as far as tax filing requirements for this year, but now I am confused. I had been led to believe that she would file as MFS in the US, I would file as married in Canada and that we would both put zero as our spouses income because neither of us earned income in the other's country. After reading these forums, I am beginning to think that this is incorrect? Have I been lead astray with the previous advice? She own's a condo in California and makes about 30K and I own a house in Manitoba and make about 80K. I also have about 100K in RRSPs, which kind of concern me if I have to file in the US.
Any clarification or suggestions would be greatly appreciated.
Thanks.
Cdn citizen/resident marrying US citizen/resident
Moderator: Mark T Serbinski CA CPA
Canada
You:
Assuming she does not join you in canada, your Cdn tax filing will not change except that you will indicate that you are married. However, you cannot put '0' as her income, since this may incorrectly trigger certain credits and deductions to which you are not entitled (GST, spousal amount). You should indicate her world income on page 1, and this will suffice to avoid this.
Her:
If she does move to canada, she would be considered a "Newcomer" and CRA has a guide specifically for her situation.
US:
Her: She must file either married filing separately MFS, or married filing jointly MFJ. If she files MFS, her taxrate may be worse than if she files MFJ. In either case, if you made no money in US, she gets an exemption for you, regardless of your income outside US. If you file jointly, then all your world incoem should be reported, and you would then use foreign tax credits(form 1116) and/or foreign wage exemption (form 2555) to reduce your US tax liability to zero. Most in your situation run the return both ways to see which yields less tax. if there is no difference, then MFS is simplest. You will be issued an ITIN (if you don't have SSN) after you file.
You: If she files MFJ then your are reporting all income on her return as above. If she files MFS, then you would only need to file if you move to US and earn money there.
Cali.
You would only be liable for cali tax if you move there or earn money there. she would NOT file as single, but under cali rules she may have other options.
You:
Assuming she does not join you in canada, your Cdn tax filing will not change except that you will indicate that you are married. However, you cannot put '0' as her income, since this may incorrectly trigger certain credits and deductions to which you are not entitled (GST, spousal amount). You should indicate her world income on page 1, and this will suffice to avoid this.
Her:
If she does move to canada, she would be considered a "Newcomer" and CRA has a guide specifically for her situation.
US:
Her: She must file either married filing separately MFS, or married filing jointly MFJ. If she files MFS, her taxrate may be worse than if she files MFJ. In either case, if you made no money in US, she gets an exemption for you, regardless of your income outside US. If you file jointly, then all your world incoem should be reported, and you would then use foreign tax credits(form 1116) and/or foreign wage exemption (form 2555) to reduce your US tax liability to zero. Most in your situation run the return both ways to see which yields less tax. if there is no difference, then MFS is simplest. You will be issued an ITIN (if you don't have SSN) after you file.
You: If she files MFJ then your are reporting all income on her return as above. If she files MFS, then you would only need to file if you move to US and earn money there.
Cali.
You would only be liable for cali tax if you move there or earn money there. she would NOT file as single, but under cali rules she may have other options.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best