1040NR vs First Year choice vs Full year 1040

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elgoog
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1040NR vs First Year choice vs Full year 1040

Post by elgoog » Sat Mar 21, 2020 11:44 pm

Hi,

I moved to USA on August 23rd, 2019 and did not meet the SPT on December 31, 2019. I will most likely meet it this year and have already filed for an extension. I got married in December, 2019 but my spouse still lives/works in Canada and doesn't have any connection to USA (no TD status, no SSN)

My options are as follows:
1. 1040NR - easiest but doesn't give me the full standard deduction
2. Make the first year choice for 2019 - this will let me do a dual status return but since it doesn't let me claim standard deduction anyways, this is not preferred due to complex reporting requirements
3. File a full year return 1040 as suggested by nelsona here: viewtopic.php?t=12471

My questions are as follows:
1. Which kind of return will let me claim the standard deduction. My calculations show that claiming it will make a big difference to my tax refund
2. Can I do option 3? Where can I find the treaty article for this?
3. Since my spouse is in Canada, should I be filing as Single or Married with the IRS? Asking because there is a deduction limit based on status

Thank you for your help.

nelsona
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Re: 1040NR vs First Year choice vs Full year 1040

Post by nelsona » Mon Mar 23, 2020 8:06 pm

1. Only #3 will allow it.
2. You can, article xxv non-discrimination.
3. you must file married, and jointly if you want to benefit most.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

elgoog
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Re: 1040NR vs First Year choice vs Full year 1040

Post by elgoog » Sun Apr 05, 2020 12:53 am

Hi Nelsona,

Thank you for the reply. Just a couple more questions:

1. My wife is still in Canada and doesn't have a SSN or TD (TN dependent status). How would I file married jointly in this case?
2. I know there is a form 3520 that needs to be filed for TFSAs but the deadline for that has already passed (March 15th). What are my options in that case?
3. I assume I have to file all my Canadian income until August on Form 1040?

Thank you again for all your help.

Sincerely,
elgoog

nelsona
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Re: 1040NR vs First Year choice vs Full year 1040

Post by nelsona » Sun Apr 05, 2020 7:46 am

You will request her ITIN along with your joint return. There is a form for that.
I will leave the 3520 discussion to others, but, regardless, if you file 1040 you need to include TFSA internal income on the 1040.
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nelsona
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Re: 1040NR vs First Year choice vs Full year 1040

Post by nelsona » Sun Apr 05, 2020 7:47 am

… as well as all other income for 2019.
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elgoog
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Re: 1040NR vs First Year choice vs Full year 1040

Post by elgoog » Sun Apr 26, 2020 11:33 pm

Thank you for your reply, nelsona. Is it possible to claim article xxv for individual (not doing a joint return) only? The reason I ask is because we have assets (e.g. house, car) under wife's name and I am assuming filing jointly would require us to declare all these on the return, thus making the return quite complicated.

nelsona
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Re: 1040NR vs First Year choice vs Full year 1040

Post by nelsona » Mon Apr 27, 2020 7:54 am

1040 doesn't report assets (other forms do), and even if you file married filing separately (wife not filing) you would still need to report anything joint.
There would probably be no tax savings for you to file 1040 MFS if you can file 1040NR.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

sitimundo
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Re: 1040NR vs First Year choice vs Full year 1040

Post by sitimundo » Mon Apr 27, 2020 3:25 pm

This response surprises me (though I admittedly not an expert). Doesn't filing the 1040 over 1040NR give significant benefits just through the standard deduction? For example, I am Canadian TN holder that moved to the USA and does not meet SPT in the first year, but the 1040 still seems to offer significant tax advantages. Or does something other than the standard deduction come into play?

nelsona
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Re: 1040NR vs First Year choice vs Full year 1040

Post by nelsona » Tue Apr 28, 2020 9:28 pm

MFS has a higher taxrate that MFJ. And a smaller standard deduction.
Of course, anytime you have a choice on how to file, you try all options and pick one.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

elgoog
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Re: 1040NR vs First Year choice vs Full year 1040

Post by elgoog » Wed Apr 29, 2020 1:28 am

Thank you. I meant to say the assets (car, house) are not joint as of now and so, I can leave those out. I might go the MFS route if I can figure out how to file 3520 and all the TFSA related forms.

I think the other question is from the perspective of the IRS, should I be filing as single or MFS since my wife doesn't live or work in the USA whatsoever?

Thanks again, nelsona.

nelsona
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Re: 1040NR vs First Year choice vs Full year 1040

Post by nelsona » Wed Apr 29, 2020 7:30 am

I already answered that you CANNOT file as single. You must file either MFS or MFJ.
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sitimundo
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Re: 1040NR vs First Year choice vs Full year 1040

Post by sitimundo » Mon May 04, 2020 2:46 am

I am not the OP, but I generally understood from previous posts on this forum that basically any Canadian citizen moving to the US and working on TN (single or married, passing SPT or not passing SPT) could claim xxv(1) from the tax treaty and file a 1040 by filing an 88. This seems particularly advantageous this year if eligible for the stimulus check. nelsona, are you saying that in some cases Canadians cannot claim xxv(1) to file a 1040 in their first year even if they do not pass SPT?

nelsona
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Re: 1040NR vs First Year choice vs Full year 1040

Post by nelsona » Mon May 04, 2020 2:49 pm

You are correct. Anyone Cdn resident or national can file a 1040 whether they live in US or not. You still have to abide by ALL the rules of 1040 however, which may always not be advantageous.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

elgoog
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Re: 1040NR vs First Year choice vs Full year 1040

Post by elgoog » Thu May 07, 2020 1:45 am

Yeah, I was considering filing a full year 1040 due to the stimulus check but since it's full year income (including income earned in Canada), it might not be that useful. The standard deduction would have been nice but the amount I would gain from claiming that deduction would be offset by any accountant costs ($1200+) since TFSAs have complex reporting requirements. Not to mention that the deadline for Form 3520 has already passed.

elgoog
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Joined: Thu Sep 19, 2019 9:40 pm

Re: 1040NR vs First Year choice vs Full year 1040

Post by elgoog » Thu May 07, 2020 2:54 pm

Regarding the first year election, if you use use xxv(1) to claim U.S. residency, does that mean you have to declare yourself as a deemed non-resident of Canada and file only Canadian income with CRA?

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