Help! I am wondering if I have made a mistake with my filing status, and need some clarification.
I am US citizen, resident of Canada, no US income. Spouse is CDN, resident of Canada, no US income. Moved to Canada five years ago, and, at that time my spouse signed a statment to be treated as a US resident for tax purposes because I believed that this was the only way to file MFJ. I have now noticed, according to Pub 54, that by making that choice,
"This means that neither of you can claim tax treaty benefits as a resident of a foreign country for a tax year for which the choice is in effect."
Does this mean that I cannot elect to defer tax on RRSP undistributed earnings, as per line 6 of 8891?
I am wondering if my CDN spouse needed to make that choice at all. Is it possible to file MFJ without making this choice? If so, how do you do that?
Filing Status Question
Moderator: Mark T Serbinski CA CPA
2 points:
As a Cdn resident, this clause doesn't apply to you, since the treaty allows your spouse to be treated as if she was american.
It only precludes claiming "tax treaty benefits as a resident of a foreign country". RRSP benefit is not only reserved for Cdn residents, it applies to anyone with an RRSP, even living in US.
So, no, there ws no need to make this choice. you can always file MJF
As a Cdn resident, this clause doesn't apply to you, since the treaty allows your spouse to be treated as if she was american.
It only precludes claiming "tax treaty benefits as a resident of a foreign country". RRSP benefit is not only reserved for Cdn residents, it applies to anyone with an RRSP, even living in US.
So, no, there ws no need to make this choice. you can always file MJF
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
If I understand you correctly, the treaty says that I can treat my spouse as if she were an American anyway, so making this choice about residency was redundant. Right?
I know that if you revoke the choice then you can never again make it in future years. I am wondering if she should bother revoking it? Are there any adverse consequences to just leaving things as is?
On a related point: my wife and I jointly own an RESP and have to file 3520 and 3520A . I assume that because we file MFJ she can be treated as if she were American, and there is no need to report her as "foreign owner"? Should this be clarified in an attachment with reference to the Treaty?
Thanks so much for the help on this.
I know that if you revoke the choice then you can never again make it in future years. I am wondering if she should bother revoking it? Are there any adverse consequences to just leaving things as is?
On a related point: my wife and I jointly own an RESP and have to file 3520 and 3520A . I assume that because we file MFJ she can be treated as if she were American, and there is no need to report her as "foreign owner"? Should this be clarified in an attachment with reference to the Treaty?
Thanks so much for the help on this.
Probablya more correct interpretation is that your spouse can alays file a US tax return, and, since you arer american, she can file jointly with you.
AIn any event, it is always done without issue.
As to the RESP, it is of course, a foreign trust, and she is the owner. What advantage she has in not listing herself as a foreign owner is beyond my level of expertise. Remmeber that the non-discrimination clause does not apply to all IRS matters, since notably estate tax does distinguish between US citizen and non-citizen spouses.
AIn any event, it is always done without issue.
As to the RESP, it is of course, a foreign trust, and she is the owner. What advantage she has in not listing herself as a foreign owner is beyond my level of expertise. Remmeber that the non-discrimination clause does not apply to all IRS matters, since notably estate tax does distinguish between US citizen and non-citizen spouses.
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