Different residencies for co-habitating spouses?

[JoshCrow]

My wife and I are Canadian citizens currently residing in Canada (I'm employed, my wife is self-employed). We currently live in a Quebec dwelling owned by her parents (my in-laws, who live in the US) - this fact will matter in a moment.

I'm considering a 9-month teaching job at a university in Texas to begin in the fall, and we plan to hurry down there to buy a home (our first) before the $8k First-Time Homebuyers Tax Credit expires at the end of April (this credit is open to resident aliens of the US, but not non-residents). I will have an H-1B, my wife an H-4 dependent.

I want to become a Canadian non-resident ASAP since obviously taxes are more favorable down in Texas. We may move before July but I understand that I can claim residency in the US once in my lifetime even if I haven't been there a full 6 months (correct me if I'm wrong).

1) Since I'm employed in Canada part of 2010 and US the other part or 2010, I guess for 2010 I must file in both countries as a resident of both countries... right? Or can I become a non-resident right away and only file in Canada based on my Canadian income?

2) For 2011, I want to be taxed only as a resident alien in the US, so I have to fill out the CRA Departure stuff. However, my wife (who will live with me in the US) wants to remain a Canadian resident, since she can then claim Quebec's generous maternity care when we have our first child (presumably next year). Is this arrangement possible? Does it help if she maintains her Quebec "dwelling" (which her parents own, but it could be in her name) and all her accounts, licenses, ties etc...

3)If my wife gets an ITIN (and I have an SSN), can we file jointly in the US but separately for Canada (i.e. me not at all since I would be a non-resident)?

4) Bonus question - I'm told that being able to work as a self-employed non-resident alien is just about the worst status to have... my wife's main client is US-based though, but they aren't "employing" her. Is there any scenario in which she is legally allowed to do self-employed work (Canadian income source, or US income source) with her feet on US soil?

5) Further complicating matters, we hope to spend the summers in her parents' dwelling in Quebec. During those summers I may or may not have some employment in Quebec (Canadian income). If I do, can I file for those in Canada without having to declare my US income?

Phew! Complicated, but we're trying to make the most out of this and would love some advice. I doubt we'll get everything we want here, but let's see how much wiggle room we have.

[agnelson]

Your question is a bit broad for this forum.
, but I'll give you the important points.

As long as you move before end of year to US, you will qualify fot HB credit, by filing full year 1040. You would have to actually move there and stay there for more than your original 9-month term however and You need to be intending to make your home and life in US to break Cdn tax ties.

You will not be considered resident in US until you begin working in US, since you cannot really abandon your Cdn residence until then. You canb uy a house in US anytime you want.

There is no "one time option" to be a US resident, don't know where you got that, however, if you file a 1040 and report world income, you can get all the credits etc that any other US taxpayer would.

As to "Quebec's generous maternity care" By leaving Canada for 6 months, she will no longer be covered by RAMQ, and spoofing a home in QC is frudulent.
Besides, if she is in US, ramq only covers a small slice of any medical costs, which should be covered by your medical insurance ay work. forget ramq.
She could stay in QC of course, and you could still be considered non-resident, but that would mean you not visiting.

[JoshCrow]

Thanks very much for the knowledgeable reply.

In case you're interested, the "one-time only" claim to US residency is something I got from the US Tax Guide for Aliens (Publication 519) and is called the First Year Choice. It seems to be a way to retroactively allow you to claim residency for the entire year even if you've only arrived in, say November - as long as you have substantial presence the year after. For example, here is the test for 2008:

"If you do not meet either the green card test or the substantial presence test for 2007 or 2008 and you did not choose to be treated as a resident for part of 2007, but you meet the substantial presence test for 2009, you can choose to be treated as a U.S. resident for part of 2008. To make this choice, you must: 1. Be present in the United States for at least 31 days in a row in 2008, and 2. Be present in the United States for at least 75% of the number of days beginning with the first day of the 31-day period and ending with the last day of 2008."

[CalGreenCard]

You can buy a house in US anytime you want...

From an immigration perspective this is true but from a mortgage perspective it will likely not be possible until he gets a SSN--which may not be feasible until late summer.

-- Thu Mar 11, 2010 2:09 pm --

"If you do not meet either the green card test or the substantial presence test for 2007 or 2008 and you did not choose to be treated as a resident for part of 2007, but you meet the substantial presence test for 2009, you can choose to be treated as a U.S. resident for part of 2008. To make this choice, you must: 1. Be present in the United States for at least 31 days in a row in 2008, and 2. Be present in the United States for at least 75% of the number of days beginning with the first day of the 31-day period and ending with the last day of 2008."

The real question remains whether they will let you in--as an H-1B--as early as May for a job that doesn't start until September. I don't think it is the IRS per se that you are going to have a problem with. The problem will be convincing CBP to let you in early as an H-1B and convincing the seller not to walk away from the deal while all this drama is playing out.

[agnelson]

As I said earlier (why our poster decided to have 2 threads active on this?) 1000's of Cdns without SSN or status buy property in US every year.

-- Fri Mar 12, 2010 6:18 am --

The blurb from 519 still requires that you establish residence in US by meeting spt, it just covers those who establish residence late in the year.
Besides, your filing dual-status would not help you to get HB credit, as your residency starting date under that test may be after you buy the house.

Your filing of a full-year 1040 (which should be your goal) would be based on the treaty, not anything in 519, regardless of spt.



519 hardly applies to Cdns.