US Citizen Spouse Living in Canada, Filing Taxes

[GustavesF]

I went through the process of filing my wife's taxes with the IRS. She had almost no income at all except for the early disbursement from the retirement plan she was registered with before moving to Canada.

So, she's been in Canada for the entire 2014 tax year, and we filed her federal and state taxes.
I'm surprised she had to actually pay a little tax, seeing her "income" was only a few hundred dollars.
On her forms we stated we were filing separately, I have no USA income, and never lived there, so I'm not filing any USA taxes, so it makes sense that we're "filing separately" as I'm not filing, she is, and I've never lived there or made income there.

...anyway, now I want to file my Canadian taxes.

Does it make sense for me to say I'm filing a joint return? If I say I'm filing separately, then I don't imagine I get any credit for her essentially being a dependent and not being able to work. I suppose I'd list her USA income as income earned abroad, but how does that work? If I say we filed separately for her USA return, and joint in Canada, does that pan out? There must be some way to offset the fact that we're two people living in Canada surviving on a single income.

What's the standard practice? Should I have filed joint with her USA tax return as well?

 

[zainy]

Hi GustavesF,

I am actually in a similar situation. My husband and I got married last year in Canada and we are currently in the midst of filing our paperwork. I work remotely for a US company but it is part-time and nowhere near enough to sustain me financially. Really, it's only to keep me occupied and bring in "pocket money" if that. Hence, my husband supports the both of us financially. My question is also whether I would have to file taxes in Canada or to my home country (Kenya) and how should my husband portray this on his tax return?

Hopefully, someone on this forum will have some insight or guide us to the appropriate channels

 

[o6ocpaka]

welcome to CRA hell my friend ;D

 

[GustavesF]

Does anyone have any insight on this?

 

[rhcohen2014]

Does anyone have any insight on this?

i'd recommend messaging Rob_To, he seems to have pretty good knowledge about this topic. he's recently replied to other tax questions here, so other tax related threads might also provide insight.

best of luck.... attempting this at the end of the month!

 

[keesio]

I went through the process of filing my wife's taxes with the IRS. She had almost no income at all except for the early disbursement from the retirement plan she was registered with before moving to Canada.

So, she's been in Canada for the entire 2014 tax year, and we filed her federal and state taxes.
I'm surprised she had to actually pay a little tax, seeing her "income" was only a few hundred dollars.
On her forms we stated we were filing separately, I have no USA income, and never lived there, so I'm not filing any USA taxes, so it makes sense that we're "filing separately" as I'm not filing, she is, and I've never lived there or made income there.

...anyway, now I want to file my Canadian taxes.

Does it make sense for me to say I'm filing a joint return? If I say I'm filing separately, then I don't imagine I get any credit for her essentially being a dependent and not being able to work. I suppose I'd list her USA income as income earned abroad, but how does that work? If I say we filed separately for her USA return, and joint in Canada, does that pan out? There must be some way to offset the fact that we're two people living in Canada surviving on a single income.

What's the standard practice? Should I have filed joint with her USA tax return as well?

The standard practice is that you and your wife file Canadian taxes first. You reference her SIN number on your return so you can claim credits. There is no "joint" filing in Canada. Then your wife files her US taxes, just her - separately. You usually need to file Canadian first to see how many tax credits you can claim based on Canadian taxes paid. Now you wife was not working in 2014 so she can just file the FEIE which exempts the first 97K USD of foreign income earned and her tax situation is simple for now. But down the road it will get more complex, especially if she gets RESP, TFSA, Canadian Mutual Funds outside an RRSP/RPP (I recommend she not get any of the above). I do encourage looking into getting an accountant who specializes in cross-border taxes for a first few years to get familiar with everything.

I recommend this thread also:
http://www.canadavisa.com/canada-immigration-discussion-board/-t184395.0.html

 

[zainy]

Hi Keesio!

I referred to the other thread you mentioned, but I'm still confused mostly because I'm not a US citizen but lived there for a couple of years therefore, filing taxes there. I got married to a Canadian citizen last June and have been working remotely for a US company (that I previously worked for) however, I am an independent contractor for them, not a payroll employee.

Someone suggested that I would only be responsibly for paying taxes to my home country which is Kenya especially because I am part time and do not make anywhere close to what mu husband does.

Do you have any suggestions or thoughts on my case?

We are looking into an accountant who is familiar with US/Canadian tax laws but I just thought I would get some feedback on here before we see him.

Thank you to all!

 

[Rob_TO]

Does it make sense for me to say I'm filing a joint return? If I say I'm filing separately, then I don't imagine I get any credit for her essentially being a dependent and not being able to work. I suppose I'd list her USA income as income earned abroad, but how does that work? If I say we filed separately for her USA return, and joint in Canada, does that pan out? There must be some way to offset the fact that we're two people living in Canada surviving on a single income.

What's the standard practice? Should I have filed joint with her USA tax return as well?

I have no idea about how taxes need to be filed with the IRS in the US.

However for your Canadian taxes, you need to change your marital status with CRA to married. Then since she is living with you here now, you can definitely claim her under the spousal amount in your tax return. CRA will ask for her "world income" earned in 2014, and that is the amount you will enter to determine your spouse amount tax credit. If her world income was over around $11K, you will get no benefit. But if she earned zero then you will get the maximum benefit which is somewhere around $1500-$2000 back on your own taxes.

If she doesn't have a SIN, you can indicate 000 000 000 in your tax return for her SIN, as that is widely recognized by CRA to indicate a dependent/spouse with no SIN or a non-resident. Your tax program may or may not accept the 000 entries depending which one you're using.

 

[GustavesF]

The standard practice is that you and your wife file Canadian taxes first. You reference her SIN number on your return so you can claim credits. There is no "joint" filing in Canada. Then your wife files her US taxes, just her - separately. You usually need to file Canadian first to see how many tax credits you can claim based on Canadian taxes paid. Now you wife was not working in 2014 so she can just file the FEIE which exempts the first 97K USD of foreign income earned and her tax situation is simple for now. But down the road it will get more complex, especially if she gets RESP, TFSA, Canadian Mutual Funds outside an RRSP/RPP (I recommend she not get any of the above). I do encourage looking into getting an accountant who specializes in cross-border taxes for a first few years to get familiar with everything.

I recommend this thread also:
http://www.canadavisa.com/canada-immigration-discussion-board/-t184395.0.html

Ah, well we've already done the first step wrong. By filing her taxes first.

However:
My wife only has American income this year. She has $0 Canadian income.
100% of her "income" has been her cancelling her retirement fund (which she had only paid into for a year...).
So I suppose that makes it simple, as she has zero non-US income to claim on her US taxes.

Thanks for linking that thread, when she does finally get to work I suppose I'll definitely need to get an accountant.

 

[GustavesF]

I have no idea about how taxes need to be filed with the IRS in the US.

However for your Canadian taxes, you need to change your marital status with CRA to married. Then since she is living with you here now, you can definitely claim her under the spousal amount in your tax return. CRA will ask for her "world income" earned in 2014, and that is the amount you will enter to determine your spouse amount tax credit. If her world income was over around $11K, you will get no benefit. But if she earned zero then you will get the maximum benefit which is somewhere around $1500-$2000 back on your own taxes.

If she doesn't have a SIN, you can indicate 000 000 000 in your tax return for her SIN, as that is widely recognized by CRA to indicate a dependent/spouse with no SIN or a non-resident. Your tax program may or may not accept the 000 entries depending which one you're using.

Change marital status with CRA to married. Done!
World income below $11k, check!
TurboTax accepts all 0's, check!

Perfect! Thanks so much for your help! You're highly recommended!