My husband is a canadian citizen who obtained his US permanent residency last year but still works in Canada and comes to the US one week out of 4. I am a US citizen and earned all my income in the US in 2012. We are trying to figure out what is the best option for us in terms of filing our taxes. We were told to file married jointly and fill out form 1116 for my husband however that option is giving us a balance to pay.
Does he even have to report his income to the IRS even though he earned all of it in Canada and lived in canada for for about 9 months out of 12? I was told yes because he is a US permanent resident now
Also when completing form 1116, what is included in the foreign taxes paid? Federal or both federal and provincial (he lives in Quebec and paid almost the same amount in federal as in provincial taxes).
Thanks in advance
Canadian citiz/US resident working in Canada with US wife
Moderator: Mark T Serbinski CA CPA
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danfranpat
- Posts: 2
- Joined: Fri Mar 16, 2012 11:33 pm
as a GC holder he must report his world income on a 1040, so it might as well; be joint with you.
1116 doesn't work well when you have both foreign and us-soured income.
If you both file separately, this would result in higher taxes for you, and may still leave him witha a tax balance even afer applying the foreign tax credit. you are free to try both methods and see which give lower overall tax. be aware that certain deductions are lost or diminished when filing separately.
A better approach would be to exclude his cdn wages by using form 2555. As a Cdn resident he qualifies for the bona fide resident test. Typically, this yields a better result than 1116 when the couple has income from both countries.
just a word of caution that some beleive claiming that he resides in canada for tax purposes would harm his GC status, or delay future naturalization. he should be attempting to live in us.
1116 doesn't work well when you have both foreign and us-soured income.
If you both file separately, this would result in higher taxes for you, and may still leave him witha a tax balance even afer applying the foreign tax credit. you are free to try both methods and see which give lower overall tax. be aware that certain deductions are lost or diminished when filing separately.
A better approach would be to exclude his cdn wages by using form 2555. As a Cdn resident he qualifies for the bona fide resident test. Typically, this yields a better result than 1116 when the couple has income from both countries.
just a word of caution that some beleive claiming that he resides in canada for tax purposes would harm his GC status, or delay future naturalization. he should be attempting to live in us.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best