Switching filing status from one year to the next

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Frankd1
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Joined: Tue Feb 14, 2012 9:58 am
Location: Canada

Switching filing status from one year to the next

Post by Frankd1 »

I was just wondering if you can switch filing status from one year to the next?

Example: filing as head of household for a number of years and then switching to mfs for a subsequent year...

My wife (USC, PR of Canada) has been filing as HoH, however, for 2015 can she file as mfs because her income is lower and may not fall under the providing half of household expenses criteria...

Then in a future year when her income rises can she go back to HoH?

Or, is it best to just remain HoH?
nelsona
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Post by nelsona »

As long as she meets the criteria, she can file anyway she wants year-by-year.

If she lives in Canada, does it really matter? she should owe no tax to IRS on her Cdn income, and her US income will be taxed higher in Canada anyways.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Post by nelsona »

the only thing that IRS doesn't let you switch from year to year is 2555 and 1116 on foreign earned income. Once you use 2555 and then change to 1116, you have to wait a few years before going back.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Frankd1
Posts: 107
Joined: Tue Feb 14, 2012 9:58 am
Location: Canada

Post by Frankd1 »

Thanks nelsona, good to know it raises no issues switching status year to year.

I believe we started using HoH when our first child was born 7 years ago...I think we did this because of the higher standard deduction and also the threshold was higher for the child tax credit. Plus her income more than met the requirement to be able to cover half the household expenses for those previous years.

Lower income for her in 2015 may not warrant HoH so I just wanted to double check.

As you mentioned, at the end of the day it should make no difference for a USC who resides in Canada.

The majority of her income is Canadian sourced with a very small amount of self employment income from the USA. Thats from her selling copies of her children's books at events or arts festival in her home state of michigan, once or twice a year.

She did use form 2555 when she first moved to Canada, used it for 3 years until we started having kids in 2009. We then switched her to form 1116 so that we could get the additional child tax credit. Been using 1116 ever since and will continue to do so until our kids are too old for the credit or we move to the USA, which ever comes first.

Thanks again
nelsona
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Post by nelsona »

AS I said, even her US-source self-employment income isn't taxed in US at the end of the day (by re-sourcing), so a simple MFS would have done.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
ND
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Post by ND »

Note this rule FYI:

Once you file a joint return, you cannot choose to file separate returns for that year after the due date of the return.
ND
Posts: 291
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Post by ND »

"and may not fall under the providing half of household expenses criteria." let me ask you this as food for thought.

HOH taxpayer must be unmarried but if married to NRA is considered unmarried for this purpose.

Can the NRA also then be ignored for NRA's contribution of household expenses and is then a USC married to NRA thus always by default deemed to provide 100% of household expenses even if in reality the NRA spouse is providing >50%, b/c that spouse, in the tax-world, isn't married to USC?
nelsona
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Post by nelsona »

"If your spouse was a nonresident alien at any time during the year and you do not choose to treat your nonresident spouse as a resident alien, then you are treated as unmarried for head of household purposes. You must have another qualifying relative and meet the other tests to be eligible to file as head of household."

So, I would say the answer to your question is no, since the tests are quite clear.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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