Can you choose to file married joint 1040 instead of 1040NR

[klanfa]

Hi,


If you are on TN1 and you have a wife on dependent (TD) visa, you can`t file married filling jointly on 1040NR and can`t get the obvious benefits. But can you chose to file full 1040 to get those benefits (tax deductions), even though you are NR and 1040NR is intended for non-residents?

Would there be any impact on your Canadian tax residency status, or Canadian residency status as required by TN1? Can you be a tax resident in both US and Canada at the same time? If you pay less tax in US because you file 1040, you still have to declare worldwide income to CRA, and after they take your US tax credits into account you'll probably end up paying the tax difference? Does this cancel out the benefits of 1040 married filing jointly?


Thanks

[nelsona]

You are -- as a Cdn resident, by treaty - - entited to file a 1040 regardless of US status. It does not make you a tax resident of US.

But the treaty allows for an even better filing method, in which you prepare a 1040 joint, repoting all world income, but then only use the taxrate to determin your tax on 1040NR. It was put in th treaty for exactly your situation. It is an XXV non-disrimination return. I've described it here several time. Happy browsing.

As you say, if you end up owing canada even when you file normal 1040NR, then going the extra to reduce US tax any further, will only mean owing more to Canada.

[flyingfish]

Hi Nelsona,

You mentioned both 1040 and 1040NR in your reply. Let's say 2010 MAY~DEC is the first time I worked in US via TN visa, do you mean I will file 1040 for the full year, as well as 1040NR for 2010?

If my spouse received EI (employment insurance benefit) from Canada for a few months while she stay with me in 2010, will that be considered as oversea income, and we can use form 2555 to claim such income with tax credit?


Thanks a lot

[nelsona]

You prooably should file 1040 full -joint.

EI is not eligible for 2555. She would report it and claim foreign tax credits using 1116.

[flyingfish]

Thanks, Nelsona. I's a bit confused earlier.

Just to confirm, I only need to file joint 1040.

There's no point to file 1040NR at the same time, right?

[nelsona]

1040 replaces your 1040NR