Tax question from TN & US resident

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jade
Posts: 10
Joined: Mon Mar 28, 2005 11:30 am

Tax question from TN & US resident

Post by jade » Mon Mar 28, 2005 11:34 am

Hi,
I have a few questions on how to file our tax 2004. I have been a resident alien in US for years. My spouse is a Canadian citizen. He worked in Canada Jan-May 2004, and had tax deducted from every paycheck. Then from May 2004 to present, he lived & worked in the US on TN, and do not have residence or dependents in Canada in this period.
1. Regarding my spouse's Canadian tax: he should only report his Jan-May Canadian income to Canada, and as a Canadian resident. Right?
2. Regarding our US tax:
1). Should we file jointly or separately? If we file jointly as residents, we'll report my whole year income & my spouse's May-Dec income (but not his Jan-May Canadian income). Is it ok? In this case, can we still use standard deduction?
2). The fact that he became a US resident for tax purpose in May 2004 means that he'll report his world income to US starting from May, not January. Am I right?
3). Can he file as Dual Status Resident? Does he have a choice of filing as Dual Status Resident or US resident?
4). If he file as Dual Status Resident, we can't file as Dual Status Residents jointly, and I'll have to file separately, right?
5). My spouse has some RRSP. Should we report it on US tax? Since there's no increase in this RRSP, is it ok if we don't report it?

We got a headache trying to figure all this out. We'd appreciate any advice you could give us.
Thank you.

jade
Posts: 10
Joined: Mon Mar 28, 2005 11:30 am

Post by jade » Tue Mar 29, 2005 8:29 am

Nelson:
Could you please help?
Thanks.

nelsona
Posts: 16413
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Tue Mar 29, 2005 8:55 am

I will give bare-bones answers as this is all covered elsewhere, and anyone else is free to answer here, too; this is not my site:

1. yes.

2.1) If you want to file full-year in US (to get joint and standard dedcution) you will have to include ALL his income.

2.2) only if he declares separately from you, otherwise full-year income must be reported.

2.3) yes, he has a choice, but his (and your) tax rate will be higher. You should be looking to exclude your and his Cdn WAGES by 2555.

2.4) That is correct.

2.5) RRSPs MUST be reported (using Form 8891 is best) even if no income is generated.


<i>nelsona non grata... and non pro</i>

jade
Posts: 10
Joined: Mon Mar 28, 2005 11:30 am

Post by jade » Tue Mar 29, 2005 11:36 am

Thanks a lot Nelson. I find that very helpful.

One more question: when you report Canadian income on US tax form, do you report the Canadian dolloar amount, or do you convert them to US dollars? If the latter, does one just find out the exchange rate at the day you file and do the calculation by one self?

Thank you.

nelsona
Posts: 16413
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Tue Mar 29, 2005 11:40 am

You report EVERYTHING (income and tax) on a US tax return in US$ of course.

You may use the exchange rate in effect for each transaction, or one that reflects the rate over the range of days you are reporting several transactions.

Simply be consistent.



<i>nelsona non grata... and non pro</i>

jade
Posts: 10
Joined: Mon Mar 28, 2005 11:30 am

Post by jade » Mon Apr 04, 2005 10:20 am

If we file SEPARATELY (and both as US residents), in "Exemptions" on 1040, can we include each other as exemptions?

My conern was that he was in the US only around half a year, and we may file separately. Does filing jointly or separately affect exemptions?

Thanks in advance.

nelsona
Posts: 16413
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Mon Apr 04, 2005 10:31 am

if you file separately, you do not get each other as exemptions.

If you are going to the trouble of filing as residents, you may as well file jointly, otherwise you are raising your tax level.

<i>nelsona non grata... and non pro</i>

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