Hi, I am a US citizen living in the US who married a Canadian in February 2005. He became a US legal permanent resident in late December 2005, but is still living/working in Montreal and has no US income. He did get a SSN with the expectation of getting a US job in 2006. My first question is, if I file married jointly for 2005, do I have to include his Canadian income and if so what form should I be using? How should he file in Canada?
Also, he cashed in about $40k of his RRSP in 2005 and of course got dinged 25%. When he files his Canadian taxes does he have to report that as income and get taxed twice? He lives in Quebec which I understand has different tax laws than the rest of Canada.
Ahh, for the days when I just filed a 1040EZ!
Thank you in advance!
US Citizen Married to a Canadian - Tax Questions
Moderator: Mark T Serbinski CA CPA
Since he was living in Canada, the 25% NR tax is not his final Cdn tax payment. He must add the toatl withdrawal to his Cdn income, and include the 25% tax as part of his other tax payments he made during the year.
He will find that he should have waited until actually leaving US to make this withdrawal.
He should also attach a note explaning why he claimed to his RRSP manager that he was a Non-resident when he was still living in Canada.
As to how you should file in US. If you file jointly he must report all income from all sources, including his RRSP withdrawal, as well as file 8891 for any RRSP accounts. Only the RRSP income generated in 2005 would be taxable in US. His wages from canada could be excluded using form 2555.
He will find that he should have waited until actually leaving US to make this withdrawal.
He should also attach a note explaning why he claimed to his RRSP manager that he was a Non-resident when he was still living in Canada.
As to how you should file in US. If you file jointly he must report all income from all sources, including his RRSP withdrawal, as well as file 8891 for any RRSP accounts. Only the RRSP income generated in 2005 would be taxable in US. His wages from canada could be excluded using form 2555.
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
Thank you for clarifying the RRSP tax situation for me. Yes, we would have preferred not to touch his RRSP, but there was an emergency that necessitated it. Hindsight is 20-20. But I appreciate you letting me know that we need to report it on our US taxes if we file jointly.
BTW, he never claimed that he was a non-resident to his RRSP Manager. He pulled the money out of the RRSP early in 2005 before he became a legal permanent resident of the US. And even though he got his Green Card in December 2005, he is still living and working in Montreal while he gets all of affairs in order. We hope his is in the States permanently by the end of the month.
Thank you again for your advice.
BTW, he never claimed that he was a non-resident to his RRSP Manager. He pulled the money out of the RRSP early in 2005 before he became a legal permanent resident of the US. And even though he got his Green Card in December 2005, he is still living and working in Montreal while he gets all of affairs in order. We hope his is in the States permanently by the end of the month.
Thank you again for your advice.
Then the '25%' tax was not really non-residnt tax, it was the withholding that any Cdn would pay on such a large withdrawl, and is merely the fist installment of the taxes on that income.
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