Hello,
I am working in US and my spouse is working in Canada. She has only been in Canada since September 2013 on a temporary work visa but hope to get her permanent residency there and work close to the border. We plan to file joint tax in United States and she plans to file separate tax in Canada alone.
Has anyone been in a similar situation and how do we go about it?
Working in US, Spouse working in Canada- Help with taxes
Moderator: Mark T Serbinski CA CPA
Re: Working in US, Spouse working in Canada- Help with taxes
[quote="bmore321"]Hello,
I am working in US and my spouse is working in Canada. She has only been in Canada since September 2013 on a temporary work visa but hope to get her permanent residency there and work close to the border. We plan to file joint tax in United States and she plans to file separate tax in Canada alone.
Has anyone been in a similar situation and how do we go about it?[/quote
I am a Canadian and American Citizen. I left Canada in 2005 and has never filed tax since then. My wife is a green card holder and currently working in Canada with a temporary work permit. ( She started living there in Sept 2013). She is going to remain there as I have currently gotten a job close the border.
Self
- Work and live in the US ( Citizen)
- no savings or RRSP in Canada
Spouse
- US green card holder.
- Works and live in Canada Since Sept 2013.
How do we file our 2013 taxes?
Can we file joint in the US ?
Can she file married filing separately in Canada and get credit for the US taxes?
Can we claim her relocation to Canada in our US taxes?
I am working in US and my spouse is working in Canada. She has only been in Canada since September 2013 on a temporary work visa but hope to get her permanent residency there and work close to the border. We plan to file joint tax in United States and she plans to file separate tax in Canada alone.
Has anyone been in a similar situation and how do we go about it?[/quote
I am a Canadian and American Citizen. I left Canada in 2005 and has never filed tax since then. My wife is a green card holder and currently working in Canada with a temporary work permit. ( She started living there in Sept 2013). She is going to remain there as I have currently gotten a job close the border.
Self
- Work and live in the US ( Citizen)
- no savings or RRSP in Canada
Spouse
- US green card holder.
- Works and live in Canada Since Sept 2013.
How do we file our 2013 taxes?
Can we file joint in the US ?
Can she file married filing separately in Canada and get credit for the US taxes?
Can we claim her relocation to Canada in our US taxes?
The real expert (nelsona) is mostly out of touch during the tax prep season, so I'll answer what I can.
US taxes: You are a US citizen and your spouse has a green card, so you both must file a US 1040 for your world-wide income. You can file as married filing jointly. Note that your wife must file FBAR forms if her total financial assets outside the US exceeded USD 10,000 at any time during 2013. If by chance you have joint accounts with her, or signatory authority (for example, power of attorney), that exceed USD 10,000, you must file FBAR as well. You can file form 1116 with your 1040 to get a US tax credit for (most of) any tax paid to Canada on your wife's Canadian income; you should also look into whether it can be excluded entirely using form 2555 (Foreign Earned Income, but she would have to be considered a Canadian resident for that).
Canada taxes: There is no such thing in Canada as married filing jointly, each spouse files separately. There are a few things that can be transferred to the spouse's return (medical expenses, charitable contributions, up to half a pension), but otherwise each is on their own. So you and your income have no Canadian obligations. I don't know whether, in the circumstances you describe, your wife would have to file a resident's tax return in Canada (T1). She has to be a tax resident of either the US or Canada, she cannot be both (but the US taxes on basis of citizenship and green card too, remember). You would need to look at the extent of her relationship to Canada, type of visa, does she have permanent living quarters there, driver's license, provincial health plan, etc. etc. She almost certainly would become a Canadian resident when she gets permanent residency status. You should look into the information on the CRA web site regarding immigration to Canada. For example, if she has investments, she will have a Canadian cost basis on them based on the day she takes up Canadian residency.
If she is not (yet) a Canadian tax resident, there will be some Canadian tax due based on her income in Canada only. You can file for a US credit for that tax paid as mentioned above.
If she is now a Canadian tax resident, she must file a Canadian T1 return on her worldwide income, from the date she took up Canadian residency (Sep 2013); do not report anything at all before that. For any US income during the period Sep-Dec, the US gets first tax crack at it -- you have to report it and include it in your tax calculation for Canada, but get a foreign tax credit (FTC) in Canada for what you have to pay the US. If her federal tax cannot use all the credit, any excess flows to her provincial tax return. Conversely, any Canadian income during Sep-Dec is fully taxed by Canada, and the tax she pays to Canada is available to use as a FTC on her US return.
The first year my wife and I did this (moving back to Canada after 34 years in the US), we have a firm that specializes in crossborder tax returns do the job for us. Since then, I have done them myself, but it takes quite a bit of work. (We're dual citizens, so we must do both countries every year).
You may have issues with your wife's green card as well. How long has she had it? If she has been a US resident for a long while, she will have to go through the expatriation process (form 8854) if she gives up her green card to immigrate to Canada.
Last thought: she will have some state tax return to prepare for Jan-Aug, but not after that, assuming she became a Canadian tax resident in Sep.
US taxes: You are a US citizen and your spouse has a green card, so you both must file a US 1040 for your world-wide income. You can file as married filing jointly. Note that your wife must file FBAR forms if her total financial assets outside the US exceeded USD 10,000 at any time during 2013. If by chance you have joint accounts with her, or signatory authority (for example, power of attorney), that exceed USD 10,000, you must file FBAR as well. You can file form 1116 with your 1040 to get a US tax credit for (most of) any tax paid to Canada on your wife's Canadian income; you should also look into whether it can be excluded entirely using form 2555 (Foreign Earned Income, but she would have to be considered a Canadian resident for that).
Canada taxes: There is no such thing in Canada as married filing jointly, each spouse files separately. There are a few things that can be transferred to the spouse's return (medical expenses, charitable contributions, up to half a pension), but otherwise each is on their own. So you and your income have no Canadian obligations. I don't know whether, in the circumstances you describe, your wife would have to file a resident's tax return in Canada (T1). She has to be a tax resident of either the US or Canada, she cannot be both (but the US taxes on basis of citizenship and green card too, remember). You would need to look at the extent of her relationship to Canada, type of visa, does she have permanent living quarters there, driver's license, provincial health plan, etc. etc. She almost certainly would become a Canadian resident when she gets permanent residency status. You should look into the information on the CRA web site regarding immigration to Canada. For example, if she has investments, she will have a Canadian cost basis on them based on the day she takes up Canadian residency.
If she is not (yet) a Canadian tax resident, there will be some Canadian tax due based on her income in Canada only. You can file for a US credit for that tax paid as mentioned above.
If she is now a Canadian tax resident, she must file a Canadian T1 return on her worldwide income, from the date she took up Canadian residency (Sep 2013); do not report anything at all before that. For any US income during the period Sep-Dec, the US gets first tax crack at it -- you have to report it and include it in your tax calculation for Canada, but get a foreign tax credit (FTC) in Canada for what you have to pay the US. If her federal tax cannot use all the credit, any excess flows to her provincial tax return. Conversely, any Canadian income during Sep-Dec is fully taxed by Canada, and the tax she pays to Canada is available to use as a FTC on her US return.
The first year my wife and I did this (moving back to Canada after 34 years in the US), we have a firm that specializes in crossborder tax returns do the job for us. Since then, I have done them myself, but it takes quite a bit of work. (We're dual citizens, so we must do both countries every year).
You may have issues with your wife's green card as well. How long has she had it? If she has been a US resident for a long while, she will have to go through the expatriation process (form 8854) if she gives up her green card to immigrate to Canada.
Last thought: she will have some state tax return to prepare for Jan-Aug, but not after that, assuming she became a Canadian tax resident in Sep.