Tax implications of newly married

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

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kibatuan
Posts: 2
Joined: Tue Aug 14, 2018 4:25 pm

Tax implications of newly married

Post by kibatuan »

Hello, I am an American citizen who just got engaged to a Canadian resident. She is coming to the US to live part time with me, and keep her Canadian residence. We are planning on getting married soon (prior to the end of 2018), so we can start the C1 NR Process as soon as possible so she can get PR and a GC to eventually work here. In the meantime, she will just travel back and forth a week at a time or so and we will have the dual residencies as indicated above. A long intro, yes... but I was really wondering about the potential Tax implications if we get married this year. She has recently quit her job in Canada, and is planning on getting further education here in Washington State while living with me on and off throughout the next year or so. I understand from my side, I can file my taxes in the U.S. as married, filing separately, which will exclude me from including any of her income for tax year 2018. However from the Canadian filing side... what implications might create issues for her that might be undesirable? I've read since Canadian filers don't have the option of filing jointly, they have to include the income of their Spouse as part of the calculation. Will this be an issue? Or are there exemptions that would offset the increase in reported income from my US earnings (which I will have already accounted for in my tax filings)?... I know a lot of info here.. but in general any support or council would be greatly appreciated! - Kevin
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Tax implications of newly married

Post by nelsona »

The problem with filing married separate, is that YOUR tax rate will be much higher, and you may not be able to take standard deduction, which as you know has become VERY large now.
So, you should be looking at filing jointly, and reporting her world income. Her wages can be excluded using 2555. Any Cdn tax she pays on other Cdn income will be used as a credit on your return. This will result in the lowest taxrate on your 1040.
For you, there is no danger of being considered a Cdn tax resident unless you move there. She will have to report your income on page 1 of her return, just so her credits etc are calculated correctly. No income tax involved for your income.

Be careful from an immigration point of view once you are married, unless she has filed for C1 she cannot simply cross over as she wishes. Even if the border finds out that she is a fiancée, they can force her to stay in Canada and get the K1 fiancée process started. She does not have free reign to cross the border in her situation. the CBP doesn't look kindly on foreign women coming to visit the BF/Fiancée. too much risk that they will stay in US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
kibatuan
Posts: 2
Joined: Tue Aug 14, 2018 4:25 pm

Re: Tax implications of newly married

Post by kibatuan »

thank you much for the timely response and the great information! I have a quick follow on question (based on your last comment regarding the immigration concerns) if you don't mind.. We've been going across the border for several Months now without issue, perhaps partly on our Nexus status, or us just being open and honest about our intentions / travels and perhaps age (50's for both of us) and professional status, etc.. who knows.. but regardless -- You mentioned the ability to travel back and forth and the chance she not be allowed to come over at some point... do you think or believe those chances of being turned away are decreased if we absolutely do get married and officially start the C1 process? We would be honest in our intentions to visit, etc. with each trip across the border and show we are married and have the C1 process underway. We keep documentation as well indicating she has a residence still in Alberta (which we won't even entertain selling until she gets her GC / PR status). Thanks again for the information / advice. Its greatly appreciated!
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Tax implications of newly married

Post by nelsona »

Once you start C1 process you are completely safe in crossing the border. Canada doesn't care so much about you crossing, it is your fiancée that faces problems.

This is best asked at an active spousal immigration site like visajourney
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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