Canadian citizen married to american living apart.

jhm27 · Post by **jhm27** » Sat May 09, 2015 7:51 pm

I am a Canadian citizen who works and lives in Canada married to an American citizen who lives and works in the US. I work a 7 on 7 off schedule that allows me to travel quite frequently and consequently I will always be over the substantial presence test but never be in the states more that 181 days in a year . I am pretty sure I have a closer connection to Canada still with my job, residence, car, passport and everything still registered to Canada. I am wondering if it is possible to be a resident of both countries, still work in Canada, claim the foreign tax credit on my tax paid to Canada and file as married filing jointly in the states. And if this would even make sense financially. Can you claim the FTC if you file jointly? My wife has substantial student loans and I understand she can't claim the deduction if we file married seperate. And if this were possible and made sense tax wise, how would RRSP contributions be affected?

nelsona · Post by **nelsona** » Sat May 09, 2015 10:19 pm

You will never owe US taxes on your income, so there is no danger in you filig jointly with your spouse. In fact, by filing jointly this will no doubt lower her taxes.

You are quite within your rights to have you treated like a US citizen spouse, and can clim all the tax benefits that an American would including foreign tax credits.
Nothing changes for Cdn income tax purposes, except that you must state that you are married, and must include her income on page 1, for determing your Cdn tax credits.

Be aware however that joining her on her tax return, makes you liable for all the extra reporting the US citizens lining in Canada face: PFIC,FBAR,FATCA, 3520, etc.

jhm27 · Post by **jhm27** » Sun May 10, 2015 1:28 pm

Thank you for the response. In researching further it looks as if I would not qualify for the FTC as I would have to file a 1040 filing jointly which voids any treaty benefits. If I were to file a 1040NR we would lose the benefit of filing jointly, so I gather I am best to file seperate as a NRA, have her claim me as an exemption and not worry about the Education credit. This should allow me to invest in TFSA and RRSPs without any issues as well. Correct me if I am wrong.

nelsona · Post by **nelsona** » Sun May 10, 2015 1:42 pm

Not correct on two counts.

First off, while you may be invoking the "treat as spouse" clause, FTC is NOT a treaty benefit, it is an IRS regulation.
Second, CDns are allowed by treaty to file 1040 ANYTIME, just like a US citizen, regardless of where they live, earn income, or are married to.

Don't bother with anything in Pub 519, it doesn't apply to Cdns.

So, please re-read my first answer. Nothing has changed.
She could indeed file with you as NRA, but your spouse would pay MUCH more taxes this way.

And, as an aside, realize that you are in a risky immigration position, since your spouse lives in US and could at any moment file for GC for you. Border knows this and could easily deny you tourist entry for immig intent, particularly since you could be seen to spend "too much" time in US.

jhm27 · Post by **jhm27** » Sun May 10, 2015 2:58 pm

Thank you very much for your replies. You have definitely helped!