Questions about Cross Border Taxes - First year

[rentua]

Well, here’s my situation:

I’m a US citizen and married my Canadian wife on 1/20/08.
She entered the US on 12/7/08 under a CR1 and lives in the US full time. She has her SSN now.
She works as a teacher in Windsor and continues to commute across the border to Windsor everyday for work.
So here are my questions:

US taxes:
1. I believe she can file with me as MFJ because she passes the Green card test. Is this correct?
2. I think I need to report all world-wide income and take the Foreign Earned Income exclusion. Is that correct?
3. How do I enter her T4 information in TurboTax?
4. How do I check whether it’s better to take the deduction or credit in TurboTax?

Can taxes:
1. What is my wife considered for tax purposes? Non-resident? Deemed resident? Deemed non-resident? She paid her rent up through the end of Dec 2008. I tried using all ways in QuickTax and I end up owing a lot when I choose Non-resident.
2. What is her tax home? Would it be Canada since she works there full time?
3. What is the “leaving Canadaâ€￾ tax form? How do I file it?

These are questions I have for now. I’m sure there will be additional ones later on. I’d rather not pay someone to do this for me, but I’m really struggling with all of this.
Thanks.

[nelsona]

1. She can file MFJ because you are a US citizen. It doesn't matter if she necer set foot in the US.
2. You need to report world income. However she is not eligible for foreiegn earned income exclusion because she lives in US. She can only use 1116 for foreign tax credit.
3. You translate her wages into Cdn dollars.
4. It will be better to take credit.

1. She is a departing resident. She will file a resident return, for her province, but with specia lrules on departure.
2. her tax home is in US.
3. Read the Emigrants guide from CRA.

[rentua]

Thanks for the information. I have a couple follow-up questions:
1. In QuickTax, the only choices are Non-resident, Deemed Non-resident, Deemed resident. Which one do I choose?
2. Can you explain why her tax home is US? Her main income source was/is from Canada. She doesn't pay any taxes in the US.

Thanks.

[nelsona]

1. he is a departing resident. Sop she files as resident (of ontario) and puts a departure date. I don't deal with softwaew vagaries.
2. Because she lives in Michigan. She will nw pay taxaes in Michigan, it's jus tthat she doesn't have any michigan taxes withheld from her pay check. It would be the same (almost) if she lived in michigan and crossed yo Ohio to work everyday.

[rentua]

1. How can I put her down as a resident of Ontario and then put the departure date at the same time? Is it possible to be a resident of Ontario on 12/31/2008 but put down a departure date of 12/7/08?
2. Do i just report only her income on the US taxes but not her taxes?

Thanks.

[nelsona]

1. Since you read the emigrants guide, you know that the departing resident writes the province of residence on the last day he was resident in canada. That's how.
2. Your report her income, and then take CREDIT for her Cdn taxes, on form 1116. I answered this already.