nelson,
In the last few days, you answered my questions related to the above post. Here is the situation -
My wife will only be joining me in the US on July 31st. Now what does it mean to me?
1. My wife will have lived in the USA for less than 183 days in 2005. Will CRA consider her factual resident of Canada? deemed resident? deemed non-resident? factual non-resident?
2. Based on answer to above question AND the fact that I will have been working in the USA for 10 months (and not have any ties to Canada) what will my status be as far as CRA is concerned? What will be my tax implications to Canada? From your answer I gather that I will have to report my income (till july 31st) on Canadian income tax, but I can deduct it not have to pay tax to Canada. Right?
3. In the 1040 return, will I have to report my Canadian income for the time in Jan and Feb I lived and worked in Canada, or does it suffice to just report income earned only in the US?
4. Will I be able to file joint US return with my wife and be able to claim exemptions and credits for my 2 kids even though they all will have only lived in the US for less than 183 days?
I know it is lot of questions. Now that I know my wife has planned not to come to the US until July 31st, I want to make sure 1) I don't end up paying taxes to Canada 2) I am able to file joint and claim exemptions for my kids. This makes a difference of US$7000 versus filing single.
Thanks in advance.
Revisited - I am on TN visa, wife gets parental...
Moderator: Mark T Serbinski CA CPA
1. she is a resident until JUly 31st, at which time she will depart and become non-resident, writing Jul 31 on her tax return.
2. You are (IMO) a deemed non-resident until July 31, at which time you will be come non-resident. This means that you file as a deemed non-resident from the time you left until the time she joins you. You still write FEb xx as your departure date, but The manner in which you file is outlined in the "Emigrants" and "Non-resident guides".
3. You will have a choice. The choice is to each file a married filing separate 1040 reporting only your US incomes (neither of you could use the standard deduction), or a joint full year 1040 where you would both report all world income for 2005. You could at that point elect to exclude your pre-arrival Cdn WAGES ONLY from US taxation and.or use Cdn tax as a foreign credit.
The reason that this might yeild less tax is that the tax rate for Married joint return is less than for separate, and the standard deduction become available to you.
Most people do the taxes all three ways (separate, joint with 2555/1116 and joint with 1116 only) and see which yields the lower US tax.
4. Yes. Cdns can be claimed as dependants even if they never set foot in US. Your spose is allowed to file jointly with you even if she never sets foot in US, as long as she is willing to report WORLD income.
<i>nelsona non grata... and non pro</i>
2. You are (IMO) a deemed non-resident until July 31, at which time you will be come non-resident. This means that you file as a deemed non-resident from the time you left until the time she joins you. You still write FEb xx as your departure date, but The manner in which you file is outlined in the "Emigrants" and "Non-resident guides".
3. You will have a choice. The choice is to each file a married filing separate 1040 reporting only your US incomes (neither of you could use the standard deduction), or a joint full year 1040 where you would both report all world income for 2005. You could at that point elect to exclude your pre-arrival Cdn WAGES ONLY from US taxation and.or use Cdn tax as a foreign credit.
The reason that this might yeild less tax is that the tax rate for Married joint return is less than for separate, and the standard deduction become available to you.
Most people do the taxes all three ways (separate, joint with 2555/1116 and joint with 1116 only) and see which yields the lower US tax.
4. Yes. Cdns can be claimed as dependants even if they never set foot in US. Your spose is allowed to file jointly with you even if she never sets foot in US, as long as she is willing to report WORLD income.
<i>nelsona non grata... and non pro</i>