TN employed in US, spouse living/working in Canada

xmaven · Post by **xmaven** » Sun Feb 02, 2014 9:07 pm

I live and work in the US on a TN Visa. I got married in 2013, but my spouse is still living and working in Canada. Can you please assist with my inquiries below.

Self
- Work and live in the US (Resident Alien)
- < $100 Canadian income from a savings account
- $5K in Canadian RRSP

Spouse
- Works and lives in Canada

I am planning on doing the following for filing my 2013 taxes.

File a 1040 (Resident Alien) and 8891 for the $5K in my RRSP in Canada. (I filed as a resident alien for 2012 and pass the STP for 2013)

(1) Since my wife does not live in the US what do I use for my filing status? I was planning on filing as â€œMarried filing separatelyâ€ but it asks for a SSN for my spouse. Since she lives in Canada she doesnâ€™t have a SSN.

(2) I am planning on â€œfiling married separatelyâ€ in the US and similarly in Canada. Is there any problems with this?

(3) Do I need to declare my income from my savings account on my US return? Or can I just declare that on my Canadian return?

nelsona · Post by **nelsona** » Mon Feb 03, 2014 10:09 am

Filing in US is the easy part. The problem is why are you filing in Canada at all? You left in 2012, didn't you? Did you file your departure return?

You must declare ALL your income on your 1040, That is what is meant by 1040.

If you think you are still a resident of Canada (I dfon't), then you would be better off filing a 1040NR, using the treaty and the special provision for married Cdns.

xmaven · Post by **xmaven** » Mon Feb 03, 2014 11:39 pm

Nelsona -- Thanks for your time to provide a response and all the help available in this forum. Please see my answers below.

>>Why are you filing in Canada at all?
I thought I had to since my wife is living and working in Canada.

>> Did you file your departure return?
No I did not file a departure return, I thought I could not since I have residential ties (spouse) in Canada. Am I able to file a departure return in this situation?

So it looks like I can do the following:
- File as a resident in the US
- Get an ITIN (W7) for my spouse and file as MFJ
- File 8891 for my RRSP
- File 2555-EZ for for foreign wages expemtion

And in Canada I can file jointly as a deemed non-resident since I am filing as a resident in the US (a treaty country).
- Can I file a departure return even if my spouse is working in canada?
- Do I need to file taxes in Canada if I file as a resident in the US?

xmaven · Post by **xmaven** » Tue Feb 04, 2014 12:02 am

Forgot to answer this....

>> You left in 2012, didn't you?

2010-2012Q1 -(Single): Worked in the US
2012Q1-2013Q2-(Single) : Canada for Post Secondary Education
2013Q2 (Married): Spouse worked in Canada
2013Q2-2013end(Married): Worked in the US, spouse worked in Canada.

nelsona · Post by **nelsona** » Wed Feb 05, 2014 5:11 pm

How you file in US, has no bearing on how you file in Canada. If your spouse is in canada and you are regularly visiting her, then you are not a Cdn non-resident. Anyone can choose to file a 1040 as a resident, but it dfoes not affect other country.

Why did you file a 2012 1040, since you were no longer living in US? Did you include all your income on it?

xmaven · Post by **xmaven** » Sat Feb 15, 2014 10:02 pm

Hi Nelsona -- Thanks again for your response. You have been very helpful.

I filed the 1040 for 2012 because I was unaware of the 1040NR at the time. And yes I did declare all my income.

I have a few more question here, any input is greatly appreciated.

- I moved here in May 2013. Do I need to show my spouses foreign income for all of 2013 on the 1040? Or just the pro-rated amount from May-December 2013?

- Do I need to file an FBAR for interest income from my Canadian Savings account? (This account was closed in 2013, but had income in 2013)

- My wife still has a Canadian Savings account which is earning interest. Does this also need to be included in the FBAR?

nelsona · Post by **nelsona** » Sun Feb 16, 2014 7:56 am

You need to preport all income for entire year in order to file 1040. You exclude by 2555 the portion of her wages and yours, which occurred while you met the physical presence test.

FBAR is for reporting the existence of foreign accounts, not income, which is reported on your 1040. whether or not you gained interest, the account existed thus needs to be reported under FBAR along with any other foreign accounts you and your spouse held.

xmaven · Post by **xmaven** » Sun Feb 16, 2014 1:29 pm

Thanks nelsona.

So to be clear -- I include will all of her wages on the 1040 as foreign income and I will use a 2555 to exempt her Canadian wages and a 1116 to take credit for Cdn taxes paid.

You mentioned that I should only exclude wages via 2555 for the portion that occurred while I met the PPT (May 2013-Dec 2013). If I am reporting the full year of foreign income on my 1040 shouldn't I exempt the entire thing? Otherwise I will be paying taxes in both US and Canada on the income from Jan 2013-April 2013.

nelsona · Post by **nelsona** » Sun Feb 16, 2014 11:08 pm

I think you are getting confused. PPT is for time OUTSIDE US, not inside. So you can only exempt Cdn wages from before May, not after.

Your wife, assuming she lived all year in Canada can exclude all her wages.

You report the income twice, but it is exempted on the US 1040 by using form 2555.

Once you exclude your early 2013 Cdn wages and your spouses entire year wages, you can not claim foreign tax credit on that income. you would only clim foreign tax credit on other Cdn inceom you report (interest, etc). And only use a prorsted portion of your Cdn tax.

mmogoogle · Post by **mmogoogle** » Thu Feb 20, 2014 4:04 am

Thanks again for your response. You have been very helpful.
The problem is why are you filing in Canada at all?