1040 for Canadian

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SergeP
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1040 for Canadian

Post by SergeP » Wed Sep 02, 2015 7:26 pm

My wife is a USC, I am a Canadian. Recently,we moved to Canada after living ~10 years in US. Before that we always filed a joint 1040. Can we simply continue filing a similar joint 1040 from Canada (we both have a 401/IRA income)? Do I need to file to IRS some kind of note about my non-resident US status now. Thank you.
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nelsona
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Post by nelsona » Thu Sep 03, 2015 9:21 am

If you have a GC, and you intend to keep it, then you must continue to file a 1040. Even those whove lived in US a long time like you might still have to file until they offcially expatriate.

Once you don't have a GC, then you are free to choose, year by year, to file a 1040 (joint or not) if it benefits you.

I doubt that filing a joint 1040 would benefit you, since now that you are taxable in canada, any tax savngs that you might get on your US income will merely be taken by CRA (since you will have a smaller foeign tax credit).

Also, by only her filing a 1040, this allows you to invest in all the things that -- by not having to file -- you won't have to do all the nasty reporting that USC's living in Canada have to submit. Your wife would keep her investments simple.

What's your thinking on why you would want to keep filing?
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SergeP
Posts: 33
Joined: Mon Mar 09, 2009 10:38 pm
Location: hawaii

Post by SergeP » Thu Sep 03, 2015 5:35 pm

Thank you for your reply. I am not USC. The reason I need to file US tax return is to get a refund for overpaid taxes. I contacted my 401 fund and they told me that a minimum 15% tax will be withhold for a non-US citizen. If my income , for example, 30K then an effective fed+province (Ontario) tax rate will be about 14% which is not sufficient to claim full FTC. This is my thinking.
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nelsona
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Post by nelsona » Thu Sep 03, 2015 8:32 pm

I didn't ask if you were USC, I asked if you has a GC, which is ostensibly the same thing.
In any event, you are wanting to be treated like a USC, so that is moot.

Well. I'm thinking your effective rate, once you add all you and your wife's income will probably be higher than 15%, since you are not eligible for any FTC on the 1040.

you will need to calculate this every year. You may very well be right that not only you but your spouse will benefit from MFJ rates on her income too.

You might also look into filing a simple 1040NR, and claiming the 401(K) and IRA income as effectively connected, and getting the graduated tax scale of 1040NR, which it would appear from your total would be less than 15%.

I'm just worried that if you continue to file 1040 you will get tripped up by not correctly reporting all your accounts and investment types (or unnecessarily limit your investment choices, to avoid reporting -- like NO TFSA) , or pay a fortune to some CPA down the road to fix this.
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SergeP
Posts: 33
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Location: hawaii

Post by SergeP » Fri Sep 04, 2015 3:03 pm

No, I am not a GC holder now (sent it back to US consulate).
It looks like for every year I have to check what option is better for us (joint or NR for me).

There is one thing about filing a joint return with a USC spouse that is not clear. According 1040 and 519, a non-resident can file 1040 this way if he makes a choice to be treated as resident by sending a statement (which prevents us from filing electronically next year).
May be this does not apply to us as we already were filing a joint 1040 for a long time?
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nelsona
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Post by nelsona » Fri Sep 04, 2015 5:31 pm

It doesn't really apply to Cdns.
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SergeP
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Location: hawaii

Post by SergeP » Sun Sep 06, 2015 7:05 pm

Could you tell why I cannot claim FTC on 1040? Is it true for both of us, me and my spouse (USC)? In my calculations for a <15% tax I used FTC in our joint 1040. Thank you.
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nelsona
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Post by nelsona » Tue Sep 08, 2015 9:51 am

You can't claim FTC on your 1040 on the IRA /401(k) income because it is US-sourced income.
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