TD / TN Help - Working in Canada

[chosen80]

Hi there,

I have a bit of an odd situation that I need some expert advice on. I am currently on a TN working in the US in my first year. My wife is a teacher and she cannot get sponsored here for a TN or H1B easily so she has received a job offer in Canada and she is currently on a TD in the US. Does she have to report working in Canada? She will be moving back permanantly and will be visiting me here and there.

What are the steps?

Thank you for your help!

[Steven]

No. She just moves.

Taxes might get more complicated if you're filing as a resident in the US, because your spouse becomes a non-resident so you can't file jointly anymore.

[chosen80]

She is being filed as a dependant in the US. She will be working part time in Canada for barely 80 hours. how does that affect me?

Thanks

[Steven]

You said she's moving "permanently". If it's permanent she has to file dual-status in the US for this year and file a T1 for the portion of the year she's in Canada (MUCH simpler indeed if she can move on January 1st or establish residential ties on that date). You have then have to file as an individual next year and explain to the IRS why you aren't filing jointly anymore.

This assumes you are filing as a resident, if you were filing as a non-resident (on 1040NR) you have a choice, you can still include her on the 1040NR or not, but as her income is all Canadian-source the tax bill will be the same. And you file your T1 as per usual.

Have a read of IRS publication 519.

[chosen80]

just sounds expensive . and confusing

You said she's moving "permanently". If it's permanent she has to file dual-status in the US for this year and file a T1 for the portion of the year she's in Canada (MUCH simpler indeed if she can move on January 1st or establish residential ties on that date). You have then have to file as an individual next year and explain to the IRS why you aren't filing jointly anymore.

This assumes you are filing as a resident, if you were filing as a non-resident (on 1040NR) you have a choice, you can still include her on the 1040NR or not, but as her income is all Canadian-source the tax bill will be the same. And you file your T1 as per usual.

Have a read of IRS publication 519.

[Steven]

It's not expensive, it's just a bit complicated. The trick to it is for her to establish residential ties to Canada on January 1st.

Then you just file a 1040 jointly for 2008, and then for 2009 you file singly and she files singly in Canada. (Provided you're filing as residents of the US right now).

Have you even filed in the US yet? If not the best thing to do is probably to file as non-residents for 2008, i.e. you file a 1040NR jointly and a T1 jointly. But you must notify your employer on a W-4 if you file as a non-resident as they have to do withholding differently.

[Steven]

Actually thinking about this if you're both Canadians and she lives in Canada, a spouse is a residential tie, so basically you have to file jointly in Canada, and then you file jointly as non-residents in the US. So you file a 1040NR and an 8840 at tax time in the US, and a T1 with a foreign tax credit in Canada. Effectively you end up paying the Canadian tax rate for whatever Province she lives in.

[chosen80]

I am filing resident status for the US for myself and I will show her deperature Jan 1, as the job she is getting is temporary. The point of moving to the US was to share in tax benefits. I can still claim her as a dependant then even though she has part time work for 20 days right .