Canadian citizen/US resident filing MFJ with Canadian spouse

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NLX
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Joined: Thu Mar 23, 2023 10:50 pm

Canadian citizen/US resident filing MFJ with Canadian spouse

Post by NLX »

My friend Alice is a Canadian citizen living and working in the US, while her husband Dave lives and works in Canada. Alice meets the substantial presence test and tie-breaks to US, whereas Dave is not a US person for tax purposes. It's well-documented in IRS Publication 519 that Alice can file as MFJ with Dave if they agree to make a IRC § 6013(g) election to treat Dave as a resident alien for tax purposes, but this election cannot be reinstated once revoked. However, can Alice get the benefits of filing as MFJ such as increased deductions and combining incomes without making this difficult-to-change election, for example using the Canada-US tax treaty? I see that nelsona has previously said that Article XXV makes an IRC § 6013(g) election unnecessary, but how does this work on paper? Thanks!
nelsona
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Re: Canadian citizen/US resident filing MFJ with Canadian spouse

Post by nelsona »

XXV makes this election unnecessary. You (sorry..."they"), can elect to file MFS or MFJ on a yearly basis just like any other American couple.

If you (sorry... "they") wish, they can file an 8833 treat election explaining, but I do not believe this is necessary.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
NLX
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Joined: Thu Mar 23, 2023 10:50 pm

Re: Canadian citizen/US resident filing MFJ with Canadian spouse

Post by NLX »

My, uh, friend thanks you for your reply, but has two questions: which paragraph(s) of Article XXV do you rely on for this conclusion, and can FEIE/FTC be used by Dave in this case?

By my reading, paragraph 1 applies to Alice, but only to the extent that if 6013(g) were restricted to US citizens and unavailable to resident aliens, XXV.1 allows Canadian citizens residing in the US to also claim it. 6013(g) is not restricted though, so isn't Alice taxed as a US citizen would be? In other words, if Alice were a US citizen, she could make a 6013(g) election with Dave, and she still can even though she isn't.

I don't read it as applying to Dave; he doesn't have any US income, so he's not liable for any taxes regardless of how he files in the US.

Do you have a different interpretation? Thanks!
nelsona
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Re: Canadian citizen/US resident filing MFJ with Canadian spouse

Post by nelsona »

She isn't making a 6013(g) claim. They BOTH are simply being treated like US citizens by paragraph 1, who don't have to make any election to file MFJ or MFS. nothing "other or more burdensome"
As de facto US citizens, they are entitled to use whatever credits, deductions, etc available to any other married US citizens in the same situation.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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