Couple considering splitting US/Canada residency
Moderator: Mark T Serbinski CA CPA
Couple considering splitting US/Canada residency
Hi there, my partner and I are considering a scenario in which we would split our tax residency (me in US, her in Canada). We would both live together in US and Canada and ensure we individually meet either SBT or Closer Connection requirements. The main reason for this is that her work would likely not qualify for a TN visa, and we would have to wait for an H1B for her later. We are both not legally married, but currently considered common law in Canada. What would be possible complications or downsides to such an approach?
Re: Couple considering splitting US/Canada residency
As long as she vists you in US and you do not vist her in canada, you will be abke to claim US residency. Otherwise, you will not sufficiently break Cdn tax residency rules (by the centre of vital interests clause)
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Couple considering splitting US/Canada residency
Thanks Nelsona. To spell things out a bit more clearly:
-We would be living in the US (and renting) for about 6 months (I would stay enough to satisfy SPT, she would stay under 183 days, and would claim Closer Connection to Canada if necessary)
-I would sever ties with Canada
-She would maintain all existing ties with Canada
-We are not considered married as the state we're living in the US does not recognize common law
A few specific questions:
1) If we are not married, I understand I would file as a single filer and miss out on some deductions in the US. If we were to marry, can I file as Married (filing separately) if she is not a US tax resident?
2) If we were to marry, does she then have to file US taxes, even if she is not a tax resident, but because she is my wife?
-We would be living in the US (and renting) for about 6 months (I would stay enough to satisfy SPT, she would stay under 183 days, and would claim Closer Connection to Canada if necessary)
-I would sever ties with Canada
-She would maintain all existing ties with Canada
-We are not considered married as the state we're living in the US does not recognize common law
A few specific questions:
1) If we are not married, I understand I would file as a single filer and miss out on some deductions in the US. If we were to marry, can I file as Married (filing separately) if she is not a US tax resident?
2) If we were to marry, does she then have to file US taxes, even if she is not a tax resident, but because she is my wife?
Re: Couple considering splitting US/Canada residency
I did some more digging, and I think the best option is to file as married jointly and file her worldwide income with IRS. However, since she is already taxed in Canada, can we use the US-Canada treaty and FTCs so effectively she pays nothing in US?
Re: Couple considering splitting US/Canada residency
Correct.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing