Charitable donations....deferrable?

[neilmck]

I'm a US citizen and permanent resident of Canada, with regular employment income to report this year. My wife is a Canadian citizen with no status in the US, who will not have any income to report this year.

We'd like to make several donations to Canadian charities. Since my wife has no income, we would apply the deductions on my Canadian return. Will I be able to apply these deductions on my US return as well? If not, is there a way to defer taking the deduction until a future year, when my wife will have income?

Thanks,
Neil

[Mark T Serbinski CA CPA]

There are several ways through which you may claim your spouse's charitable deductions in the U.S.

First, you could elect to have your non resident alien spouse treated as a U.S. resident for the year (under IRC 6013(g). Since she has no income, this can only help your tax situation when you file a joint return.

Otherwise, you could claim her as a dependent, but only if you provide over half of her support for the year.

In either case, your wife would need to obtain an ITIN.



Regards,

Mark T. Serbinski, CA, CPA

[Carson]

Adding to what Mark has said, is there a reason you can not make the donations in your name instead of your wife? You could then claim them on your 1040 return without having to include your wife under IRC 6013(g) and going through the pain of getting an ITIN.

Of course, depending on your income and other deductions, claiming the charitable donations may not make any difference anyway. The best answer is to run the different scenarios and see what gives you the best result.

There is no way to elect to defer taking the deduction in the year the donations are made; the donations may be carried forward if they represent too large a percentage of your adjusted gross income.

Regards,

CRH

[neilmck]

Thanks guys...this may warrant a consultation, let me know....but my wife has a significant amount of deferred stock option income from exercised (in 2003) but unsold shares, so i don't want to expose her at all to US taxation (who doesn't honor the deferral, as I'm told).

But from what Carson is saying, I can apply the donation on my US tax return (as well as my Canadian tax return), even though it is Canadian charities we're giving to....?

[Carson]

Short answer - YES. Under the Treaty, A US citizen (or tax resident for that matter) can treat donations to Canadian charities in essentially the same way as if they were US charitable donations.