Working in US since Sept. ; Husband living in Canada

[bkordi]

Hi,

I moved to US from Canada on Sept. 2012 on a TN visa. But, my husband is still living in Canada. I did not have any income in 2012 in Canada, but my husband was working there. My husband and I also have a huge amount of tuition credit in Canada.

I've been also going back and forth to Canada every 2-3 months, since Sept. 2012, so I believe I am still a Canadian resident, as well.

Since my husband is still living in Canada, would you let me know the best approach to take care of our family's taxes.

Thanks a lot for your help.

[nelsona]

It is questionable whether you are stil resident or not, but your trips back to Canda are problematic if you were attempting to be deemed non-resident of Canada. If this was the case, then he should be visiting you as this would show that is where yo uBOTH intend to live, and that is where YOU live right now.

The problem with tuition credits and subsequently earning US income (and not breaking Cdn ties), is that, the tax code requires you to use your tuition credits before you can use foreign tax credits.

So, it looks like, for 2012 at any rate, you will need to report your US (world) income, on your 2012 Cdn tax return as a resident, which essentially means you will be wasting your tuition credits instead of getting credit for US tax paid.

This has become a common problem.

If you could declare deemed non-residency from sept 2012 onward, you would not have to report any US income, and would save your tution credits for a future year when truly living in Canada.

Since you won't be using much US tax towrds your Cdn tax on your US wages, it becomes crucial that you lower your 2012 US tax bill as low as possible.
You are allowed to file 3 or 4 ways in US for 2012, so you might have to pick teh one that saves you the most US tax:

1040NR, reporting only your US wages
1040 dual-status, reporting only your US wages
1040 full-year married-separate, reporting all your world income for 2012
1040 full-year married-joint, where you BOTH report your world incomes for the year, anbd exclude his wages by form 2555.

I would try 1040NR, or 1040 Married joint.

The problem you also face is that if you don't declare non-residency sept 2012, you are pretty much stuck until your spouse leaves Canada as well, since you will have nothing to point to as having changed from sept 2012, until he moves.

Personally, I would be claiming deemed non-residence status since sept 2012, filing a Cdn departure return, and filing full year 1040 MFJ to show CRA that I mean business when I moved.