H4 married canadian to H1B foreigner

gordito · Post by **gordito** » Thu Apr 09, 2015 2:50 pm

hi everyone,

I'm an H1B holder that has filed as resident for many years. My wife has been on H4 for 1y+ and last year was the whole year in the US with me taking care of our newborn. She had income from Canada for baby (baby leave) from canadian gov and her job in a gov agency (the supplement). Last time we spoke with Canada, they considered her a resident. Her family is there, gets money from gov, etc. So, effectively, her tax home is really Canada as far as we understand the situation. But I cannot use form 8840.

Now, when we file, I do not know what is the best way to approach our situation. There is no way I can exempt her from being a resident (183+ days in country) but I do not know the best way to go about the treaty. From my initial dabblings in filing, it appears that her income would cause us a major hit and we would need to pay again for taxes in US, which seems weird as we would then be double taxed?

Is the best way file married jointly and use the 1116 form? I am lost in the tax web, routed from document to document!

I would love any advice/help, thanks

nelsona · Post by **nelsona** » Thu Apr 09, 2015 4:52 pm

Regardless of whether she is considered Cdn resident or not, you have the right to include her on your 1040, which would reduce the tax on your income far more than it would make her taxable in US.

Youare clearly not Cdn resident. So you should only be filing inUS, and should be filing jointly.

You should have been doing this for years, and have been overpaying your US tax all this time.

If she is a govt worker, then she is a deemed resdint of canada, but that does not prevent her from filing in US as well.

Cdn Govt wages are exempt from US taxation. The other income is repoirtable in US, but 1116 will take care of this.

gordito · Post by **gordito** » Thu Apr 09, 2015 5:52 pm

[quote="nelsona"]Regardless of whether she is considered Cdn resident or not, you have the right to include her on your 1040, which would reduce the tax on your income far more than it would make her taxable in US.

Youare clearly not Cdn resident. So you should only be filing inUS, and should be filing jointly.

You should have been doing this for years, and have been overpaying your US tax all this time.

If she is a govt worker, then she is a deemed resdint of canada, but that does not prevent her from filing in US as well.

Cdn Govt wages are exempt from US taxation. The other income is repoirtable in US, but 1116 will take care of this.[/quote]

Thank you for your help nelsona. Hopefully you can further help me out here :)

She is a govt worker, but I was under the impression that Section 893 is only for diplomatic related jobs? Does it really apply to all government work? She works for the canadian EPA-alike.

By exempt, you mean we don't have to declare that income at all ? We would only declare Canadian parental leave or not even that? Would we need to provide some information or simply omit it from the tax forms altogether?

gordito · Post by **gordito** » Fri Apr 10, 2015 10:59 am

Just to follow up on what you've said and I have further found out:

Do you recommend to file married jointly, do not declare her income and add a form 8833? Seems like we will need to add a form 8833 if we are claiming exemptions.

Would I claim the exemption based on specifics regarding being a government worker?

nelsona · Post by **nelsona** » Fri Apr 10, 2015 5:37 pm

As I've said 3 times, her govt WAGES are exempt from IRS taxation. not anything else.

nelsona · Post by **nelsona** » Fri Apr 10, 2015 5:40 pm

8833 would be filed for treaty exemption based on article XIX of the US Canada treaty.