MFJ vs MFS U.S. Citizen with Canadian spouse

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Diskdoctor
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Location: Winnipeg

MFJ vs MFS U.S. Citizen with Canadian spouse

Post by Diskdoctor » Wed Mar 09, 2011 12:54 pm

My wife and I have been filing U.S. taxes MFJ since an accountant made the 6013(g) election for us the year we moved to the U.S. We have since returned to Canada. She is a U.S. citizen and I am not. I am trying to decide whether to revoke the election and switch to her filing MFS and wondering if I am overlooking something.

If we go MFS:
- less accounting/paperwork
- I don't have to file paperwork with IRS on my RRSPs and TFSAs
- Standard deduction would be cut in half. This would be offset by the joint investment income we claim being cut in half.
- According to information in this thread [http://forums.serbinski.com/viewtopic.p ... seperately] she is still entitled to claim me as an exemption so we would have the same number of exemptions as now.

If we go MFJ:
- keeps things clearer if we ever move to the U.S. again
- might hold some tax advantage at a later date where we split the year between the two countries?

nelsona
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Post by nelsona » Wed Mar 09, 2011 1:09 pm

The "election" you made the first year you moved was only in effect that year, since subsequently she became a US tax resident. You were free to file MFS or MJ ever since, and continue to do so, of course. Its a year-by-year choice in any event. I would argue that by treaty, you don't even have to formally elect one way or the other: simply file as you wish, as any US citizen couple wuld do while living abroad.

I see no harm in filing MFS while you are both in Canada. Should you ever owe any US tax, then simply file MFJ and the tax should go away. Such a case would be selling a home with greater gain than the MFS exemption.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Diskdoctor
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Location: Winnipeg

Post by Diskdoctor » Wed Mar 09, 2011 1:41 pm

That's an interesting interpretation. According to pub. 519 the election stays into effect basically until you revoke it and once you revoke it you can't make the election again. They don't seem to leave any wiggle room. Now pub 519 is not the actual treaty but it is an official IRS document.

from IRS publication 519:
Ending the Choice

Once made, the choice to be treated as a resident applies to all later years unless suspended (as explained earlier under Suspending the Choice ) or ended in one of the following ways.

If the choice is ended in one of the following ways, neither spouse can make this choice in any later tax year.

1. Revocation
2. Death
3. Legal Separation
4. Inadequate Records

Suspending the Choice

The choice to be treated as a resident alien is suspended for any tax year (after the tax year you made the choice) if neither spouse is a U.S. citizen or resident alien at any time during the tax year. This means each spouse must file a separate return as a nonresident alien for that year if either meets the filing requirements for nonresident aliens discussed in chapter 7.

nelsona
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Post by nelsona » Wed Mar 09, 2011 2:17 pm

Very little of 519 applies to cdns.

In any event, you did not revoke the election, the election became moot because you moved to US.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Diskdoctor
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Location: Winnipeg

Post by Diskdoctor » Wed Mar 09, 2011 5:55 pm

I assume you mean there is some part of a Canada-U.S. tax treaty that allows me to file U.S. taxes separate from 6013(g)?

nelsona
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Post by nelsona » Wed Mar 09, 2011 8:00 pm

Yes. Article XXV
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Brock Webb
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Re: MFJ vs MFS U.S. Citizen with Canadian spouse

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