File Income Tax, yay or nay?

[sajjad365]

Hello geniuses,

I will try to keep this brief with as much detail as possible.

I am a Canadian citizen. My wife is a Kenyan who resided in USA (on an F1 with OPT) until May 21, 2014. She moved to Canada and we wed in June. She has been residing in Canada on a visitor permit ever since. We've extended it twice while we prepare her Outland PR application.

She was working in the US as an independent contractor and continued working from Canada for ABC. We contacted two accountants and intially both said we would need to file her income taxes in Canada. I reviewed the CRA guidelines, and I believe she has significant residential ties in Canada. Furthermore, from May-Dec 2014 is 224 days (more than 183 as per CRA making her a resident, correct?).

Anyways, we went ahead with accountant X. Her initial assessment was that she would file an income tax, despite not having a SIN number. She didn't mention anything about ITN nor did it occur to me. Also, since she is an independent contractor working for a US firm, she could claim expenses (internet, phone, rent, travel, etc.). Also, my wife would file taxes in the US for income between Jan-May 21, and file taxes in Canada from May 22-Dec 31, 2014. This all made sense to me. My wife was considered low income and I was high income, so X would claim my wife as a dependent to alleviate some of my taxes and get a larger return.

Today, I received an email from X stating she did not file my wife's taxes because she doesn't have a SIN number. Umm..WHAT? She stated that my wife should file her taxes for the entire year (2014) in the US. That's...not...right, is it?

I have lost trust in X. Needless to say, I will seek clarification from them, but in the meantime can any one of you experts answer my query:

• DOES SHE HAVE TO FILE TAXES (in Canada)?
• If so, she requires an ITN?

Thanks in advance.

 

[canvis2006]

Contact CRA and ask them, they can help:

http://www.cra-arc.gc.ca/cntct/phn-eng.html

 

[micmac101]

Hello geniuses,

I will try to keep this brief with as much detail as possible.

I am a Canadian citizen. My wife is a Kenyan who resided in USA (on an F1 with OPT) until May 21, 2014. She moved to Canada and we wed in June. She has been residing in Canada on a visitor permit ever since. We've extended it twice while we prepare her Outland PR application.

She was working in the US as an independent contractor and continued working from Canada for ABC. We contacted two accountants and intially both said we would need to file her income taxes in Canada. I reviewed the CRA guidelines, and I believe she has significant residential ties in Canada. Furthermore, from May-Dec 2014 is 224 days (more than 183 as per CRA making her a resident, correct?).

Anyways, we went ahead with accountant X. Her initial assessment was that she would file an income tax, despite not having a SIN number. She didn't mention anything about ITN nor did it occur to me. Also, since she is an independent contractor working for a US firm, she could claim expenses (internet, phone, rent, travel, etc.). Also, my wife would file taxes in the US for income between Jan-May 21, and file taxes in Canada from May 22-Dec 31, 2014. This all made sense to me. My wife was considered low income and I was high income, so X would claim my wife as a dependent to alleviate some of my taxes and get a larger return.

Today, I received an email from X stating she did not file my wife's taxes because she doesn't have a SIN number. Umm..WHAT? She stated that my wife should file her taxes for the entire year (2014) in the US. That's...not...right, is it?

I have lost trust in X. Needless to say, I will seek clarification from them, but in the meantime can any one of you experts answer my query:

• DOES SHE HAVE TO FILE TAXES (in Canada)?
• If so, she requires an ITN?

Thanks in advance.

She is considered a VISITOR She doesn't have a Social Insurance Number therefor she can't file her taxes in Canada as she is not a Citizen nor a Permanent Resident nor can you claim her as a dependant.

 

[rhcohen2014]

She is considered a VISITOR She doesn't have a Social Insurance Number therefor she can't file her taxes in Canada as she is not a Citizen nor a Permanent Resident nor can you claim her as a dependant.

this is not true. CRA defines visitors at residents for tax purposes if they've lived in canada for 183 days. if she doesn't have a SIN# then she can use 000 000 000 or she can apply for an ITN (if she's eligible). there are many visitors who file canadian taxes because of the amount of time spent in canada and ties to the country.

 

[micmac101]

this is not true. CRA defines visitors at residents for tax purposes if they've lived in canada for 183 days. if she doesn't have a SIN# then she can use 000 000 000 or she can apply for an ITN (if she's eligible). there are many visitors who file canadian taxes because of the amount of time spent in canada and ties to the country.

I know this as fact as my son married an American and Revenue Canada would not allow her to file as she was a visitor not a resident.

 

[Alurra71]

Hello geniuses,

I will try to keep this brief with as much detail as possible.

I am a Canadian citizen. My wife is a Kenyan who resided in USA (on an F1 with OPT) until May 21, 2014. She moved to Canada and we wed in June. She has been residing in Canada on a visitor permit ever since. We've extended it twice while we prepare her Outland PR application.

She was working in the US as an independent contractor and continued working from Canada for ABC. We contacted two accountants and intially both said we would need to file her income taxes in Canada. I reviewed the CRA guidelines, and I believe she has significant residential ties in Canada. Furthermore, from May-Dec 2014 is 224 days (more than 183 as per CRA making her a resident, correct?).

Anyways, we went ahead with accountant X. Her initial assessment was that she would file an income tax, despite not having a SIN number. She didn't mention anything about ITN nor did it occur to me. Also, since she is an independent contractor working for a US firm, she could claim expenses (internet, phone, rent, travel, etc.). Also, my wife would file taxes in the US for income between Jan-May 21, and file taxes in Canada from May 22-Dec 31, 2014. This all made sense to me. My wife was considered low income and I was high income, so X would claim my wife as a dependent to alleviate some of my taxes and get a larger return.

Today, I received an email from X stating she did not file my wife's taxes because she doesn't have a SIN number. Umm..WHAT? She stated that my wife should file her taxes for the entire year (2014) in the US. That's...not...right, is it?

I have lost trust in X. Needless to say, I will seek clarification from them, but in the meantime can any one of you experts answer my query:

• DOES SHE HAVE TO FILE TAXES (in Canada)?
• If so, she requires an ITN?

Thanks in advance.

While it is true that you can claim your spouse as a dependent, be aware.

She WILL need to file her US tax return in the US, and yes, for the entire year. Her income was from the US. If she paid no taxes to the US you can be assured she will have a debt to pay to the IRS. If you claim her as a dependent on your taxes in Canada, you will need to have her income statements handy. She can use the 000000 method for a SIN number, that is how my spouse and I filed my first year here as well.

Your wife residing in Canada and working for a US company on a US work visa (was it expired in May or still valid?) sounds like an entirely different ball of wax to me and one I can't really decipher, however, it could get messy if one thing goes wrong. Be sure to hold onto all relevant paperwork and such in case you are ever called on to supply proofs.

 

[rhcohen2014]

I know this as fact as my son married an American and Revenue Canada would not allow her to file as she was a visitor not a resident.

was she in canada for more than 183 days consecutively? if not, then she wouldn't be a resident for tax purposes. there are many people who HAVE been able to file taxes without a sin #. there are certain factors that allow some people to file and some people not. even if she doesn't file taxes on her own, she would have the ability to be added to her husband's tax return. at that point, using 000000000 works just fine. i wasn't a resident or visitor for an extended period of time in 2013 and my world income was added to my husband's return no problem. again, they just used 0000000000 to identify me.

 

[Alurra71]

I know this as fact as my son married an American and Revenue Canada would not allow her to file as she was a visitor not a resident.

Interesting. My husband was allowed to file with me as a dependent, and I filed my own return and even received a refund due to income splitting, before I was 'landed'. Maybe your son should look into a new tax accountant?

 

[Rob_TO]

She is considered a VISITOR She doesn't have a Social Insurance Number therefor she can't file her taxes in Canada as she is not a Citizen nor a Permanent Resident nor can you claim her as a dependant.

This is completely wrong information.

First, a non-resident spouse can definitely be included as a dependent. Especially if they are residing with you in Canada, you simply add them as dependent on your taxes and include their world income. No SIN is needed, can just use 000s.

And second, non-Citizens/PRs may be considered deemed or factual residents for tax purposes, and may owe tax here in Canada on their world income. There are lots of reasons to be seen as a deemed resident, including time spent in Canada and your ties to Canada (like having a spouse here). This is a complex issue so it's always advise to speak to an accountant experienced with non-resident spouses.
http://www.howlandtax.com/articles/nonresident-spouse.htm
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

If just claiming a spouse on your own taxes, the spouse does not need any SIN as they can just use 000s.
However if the spouse needs to actually file taxes in their own name, then a SIN or ITN is mandatory. Since she wouldn't qualify for a SIN, if considered a resident and need to file taxes then she would need to apply for an ITN: http://www.cra-arc.gc.ca/E/pbg/tf/t1261/t1261-14e.pdf

 

[sajjad365]

UPDATE: To reiterate, my wife was in Canada for 224 days consecutively from May-Dec 2014. Our accountant said that she claimed her as my dependent. Presumably she used 000-000-000 as her SIN...I need to confirm that. This is what she replied this morning:

"...but because she is self-employed, we can choice she report all the income to American or Canada, just because she did not have SIN no, I still put her under your tax as dependent, and income is 0". My wife earned approximately $13k USD from Jan-Dec.

I have kept all pay stubs including her 1099 (equivalent to T4) in case CRA or IRS come back later. We will file her income taxes for the entire year in US now. I hope we're doing the right thing. My primary/only concern is no hiccups with her PR application down the road.

 

[Rob_TO]

"...but because she is self-employed, we can choice she report all the income to American or Canada, just because she did not have SIN no, I still put her under your tax as dependent, and income is 0". My wife earned approximately $13k USD from Jan-Dec.

I don't think this is correct. You can claim her under spousal amount as a dependent, but you need to deduct her world income (amount earned outside Canada) from the amount that you claim.

Since her world income is more than $11,138 (converted to Canadian), I don't think you should get any benefit at all for claiming her as spouse/dependent.

 

[OhCanadiana]

Hello geniuses,

I will try to keep this brief with as much detail as possible.

I am a Canadian citizen. My wife is a Kenyan who resided in USA (on an F1 with OPT) until May 21, 2014. She moved to Canada and we wed in June. She has been residing in Canada on a visitor permit ever since. We've extended it twice while we prepare her Outland PR application.

She was working in the US as an independent contractor and continued working from Canada for ABC. We contacted two accountants and intially both said we would need to file her income taxes in Canada. I reviewed the CRA guidelines, and I believe she has significant residential ties in Canada. Furthermore, from May-Dec 2014 is 224 days (more than 183 as per CRA making her a resident, correct?).

Anyways, we went ahead with accountant X. Her initial assessment was that she would file an income tax, despite not having a SIN number. She didn't mention anything about ITN nor did it occur to me. Also, since she is an independent contractor working for a US firm, she could claim expenses (internet, phone, rent, travel, etc.). Also, my wife would file taxes in the US for income between Jan-May 21, and file taxes in Canada from May 22-Dec 31, 2014. This all made sense to me. My wife was considered low income and I was high income, so X would claim my wife as a dependent to alleviate some of my taxes and get a larger return.

Today, I received an email from X stating she did not file my wife's taxes because she doesn't have a SIN number. Umm..WHAT? She stated that my wife should file her taxes for the entire year (2014) in the US. That's...not...right, is it?

I have lost trust in X. Needless to say, I will seek clarification from them, but in the meantime can any one of you experts answer my query:

• DOES SHE HAVE TO FILE TAXES (in Canada)?
• If so, she requires an ITN?

Thanks in advance.

UPDATE: To reiterate, my wife was in Canada for 224 days consecutively from May-Dec 2014. Our accountant said that she claimed her as my dependent. Presumably she used 000-000-000 as her SIN...I need to confirm that. This is what she replied this morning:

"...but because she is self-employed, we can choice she report all the income to American or Canada, just because she did not have SIN no, I still put her under your tax as dependent, and income is 0". My wife earned approximately $13k USD from Jan-Dec.

I have kept all pay stubs including her 1099 (equivalent to T4) in case CRA or IRS come back later. We will file her income taxes for the entire year in US now. I hope we're doing the right thing. My primary/only concern is no hiccups with her PR application down the road.

Hi there, I think I can help you get info to get to an informed decision

Her tax status in Canada will depend on where here primary residence (and residential ties) were. As I see it, there are 3 scenarios:

1. She was an ordinarily (aka factual) resident in Canada since May 2014 (certainly the case if her primary residential ties were in Canada). CRA's "Determining your residency status" at http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html can help you ascertain if this category applies. If so, she'll be considered a resident of Canada as of the date she established those primary residential ties and pay taxes based on her world-wide income for that part of the year.

2. She would be deemed a resident of Canada (since she spent 183+ days in Canada) and would pay taxes as a resident on her world-wide income for the whole year

3. If 1 or 2 applies and if another country also considers her to be a resident, the tie-breaker details of any tax treaty Canada has with the other country she may be deemed a non-resident and then file as a non-resident paying taxes only on her Canadian sourced income. The details for qualifying as a non-resident, instructions, and link to the return are at http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.html

* * *​

Two other links that may help are:

If you are still trying to decide between 1, 2, and 3 and want more detailed information, take a look at "S5-F1-C1: Determining an Individual's Residence Status" at http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s5/f1/s5-f1-c1-eng.htmlr
and
Guide for "Newcomers to Canada" available at http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nwcmr-eng.html as, once she is considered a resident of Canada, she needs to declare her worldwide assets (will come in useful if you ever leave Canada to calculate relevant capital gains).

* * *​

As two asides:
1. For whenever she is a Canadian tax resident, for her self-employed income she'll need to set up a GST/HST account. Depending on the specifics of the account, she may not have to charge her clients GST/HST so the business return would be easy (e.g., if all the benefit is for a company outside Canada, etc) but I'm pretty sure she needs to submit a business return for it anyway (good news is it would let her claim deductions for relevant expenses). See http://www.cra-arc.gc.ca/bsnsss/menu-eng.html
2. Separately, for the US, note that she would be considered a resident if she meets the substantial presence test which is very possible if she was in the US much in prior years. Take a look at http://www.irs.gov/Individuals/International-Taxpayers/Substantial-Presence-Test but basically:

You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:

    31 days during the current year, and
    183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
        All the days you were present in the current year, and
        1/3 of the days you were present in the first year before the current year, and
        1/6 of the days you were present in the second year before the current year.

If she is a resident, remember my scenario #3 above and take a look at the US/Canada tax treaty http://www.fin.gc.ca/treaties-conventions/usa_-eng.asp to determine if she'd be a Canadian or US resident.

* * *​

Good luck! It can feel hairy and overwhelming but is doable. Generally speaking the international section of CRA is also helpful and can a call to CRA can also help you make determinations for things like GST/HST.