My wife and I have been living in Canada since 2002, and commuting to work in the US. In 2002 & 2003 we filed MFJ tax return in the US which lead to a huge tax bill in Canada, so for tax years 2004, 2005, 2006 we filed MFS in the US which considerably reduced our tax bill in Canada. (I know we really are not saving any tax but it did help us in some ways.)
For tax year 2007 I want to file MFJ again in the US. Due to the exchange rate being low and Canada reducing there taxes a little, the numbers are better.
Question – I know in the US switching from MFS to MFJ for any tax year is not a big deal, but what about when we file in Canada does it matter in CRA eye’s if we switch back and forth?. I’m thinking no because it is a valid filing status in the US, but wanted to check.
Also I have been filing in the US form 8891 for tax years 2004, 2005, 2006 and attaching to my MFS 1040 return. Any thing to be concerned about now that we will be filing Joint?.
Switching from MFS to MFJ
Moderator: Mark T Serbinski CA CPA
No problem.
If you file MFJ, then you both need 8891's for your RRSPs.
I have found that there are some instances when filing MFJ is beneficial, usually whn only one spouse is working.
If you file MFJ, then you both need 8891's for your RRSPs.
I have found that there are some instances when filing MFJ is beneficial, usually whn only one spouse is working.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Just a follow up question… Now that we are filing MFJ we are allowed to deduct Child Care Expenses (We both have employment income in the US) on form 2441. The child care was paid to a day care center located in Canada, can the expenses still be deducted?.
After doing some calculations tax saving for child care is hardly worth filling out form 2441 because what we save in the US we just owe to Canada.
If I don’t clam Child Care Expenses on the 1040 US return, can we still clam it on the Canadian return or does it have to be clamed on Both Sides?.
Thanks
After doing some calculations tax saving for child care is hardly worth filling out form 2441 because what we save in the US we just owe to Canada.
If I don’t clam Child Care Expenses on the 1040 US return, can we still clam it on the Canadian return or does it have to be clamed on Both Sides?.
Thanks
Both returns are independant.
You only need to reduce your US tax to the extent that -- once you have aggressively lowered your Cdn tax with all dedcutions and credits possible -- your US tax is just below this (ie. gets used up completely on the foreign tax credit lines of your Cdn return).
Anymore than this is a waste of effort.
In the case of the child care credit though, you might want to give it a dry run -- since it may be difficult for IRS to accept the expenses without the provider's SSN -- just to see if it can be done. You may need it in some other year
You only need to reduce your US tax to the extent that -- once you have aggressively lowered your Cdn tax with all dedcutions and credits possible -- your US tax is just below this (ie. gets used up completely on the foreign tax credit lines of your Cdn return).
Anymore than this is a waste of effort.
In the case of the child care credit though, you might want to give it a dry run -- since it may be difficult for IRS to accept the expenses without the provider's SSN -- just to see if it can be done. You may need it in some other year
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best