Filing taxes with US spouse

[o6ocpaka]

Greetings, wondering if someone could shed some light on how should I properly file my taxes this year for year 2014.

My wife is living with me and we got married last year. I guess she is deemed as a resident from CRA perspective now (more than 183 days here last year, we are married etc).
She is a US citizen and we sent our PR application a couple of weeks ago. Her status is extended here by another year as a visitor. So far I have read a lot of info about this and still completely confused...

She has never worked in Canada in 2014 but worked for few months in States before she came here (january to april). She got her paper from employer and will do her US taxes with IRS the same way as before.

Now, how should I do it on my application? This is where all the confusion takes place. I use studio tax, and after selecting status - to married and filing separately - the SIN for my wife is not required to proceed (which is good). But then you have report her net income (it does not say it is the world income).
There is also a check box to select that she had no income, if I do that I see a hefty refund of around $2000, which it does not seem right....
Some suggest that we should put whatever the net amount she made in the States, but how is that right when she is filling her own taxes for that with IRS?!
Some say we should not claim spousal income on line 303.

I found this page that makes it some what clear but still have questions:
http://www.taxtips.ca/personaltax/whopaystax.htm

For newcomers to Canada, you have to report your world income for the part of the year that you were a resident of Canada. Some personal tax credits will be prorated based on the day you immigrated to Canada.

Meaning that I put her netincome as 0?

Thanks for any help, feels like my head is about to explode. :-\ :-\

 

[zainy]

Is your wife a US citizen? The reason I ask is because I am in a similar situation, however, I am not a US citizen.

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?

I will take a look at the link you posted. Thanks!

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

 

[o6ocpaka]

Yep, she is a US citizen.
I have tried calling CRA twice already regarding this and every time after explaining my situation they put me on hold, talk to someone and then forward me to some department that *should know*. That department never answers, they apologize and offer a call back. I have a scheduled one now in the next 2 days...we will see how that turns out.

It seems people that work there are very incompetent and can't give me an answer on what needs to be done.
I feel like declaring her net income as 0 and that's it, because she has not worked in Canada or anywhere in the world since she became a *deemed resident* by CRA but not immigration office in 2014...

This is very frustrating and confusing.

 

[screech339]

Yep, she is a US citizen.
I have tried calling CRA twice already regarding this and every time after explaining my situation they put me on hold, talk to someone and then forward me to some department that *should know*. That department never answers, they apologize and offer a call back. I have a scheduled one now in the next 2 days...we will see how that turns out.

It seems people that work there are very incompetent and can't give me an answer on what needs to be done.
I feel like declaring her net income as 0 and that's it, because she has not worked in Canada or anywhere in the world since she became a *deemed resident* by CRA but not immigration office in 2014...

This is very frustrating and confusing.

May I suggest that you use an accountant very familar with US/Canada taxes. We used an accountant that deals with US/Canada to resolve any possible confusion. My wife is not American but we both lived in US before moving to Canada.

 

[o6ocpaka]

Thanks screech, I thought of that too already, someone like that should call me in the next few days from CRA...
I sure hope they know their stuff when they do call... 8)

 

[zainy]

Yep, she is a US citizen.
I have tried calling CRA twice already regarding this and every time after explaining my situation they put me on hold, talk to someone and then forward me to some department that *should know*. That department never answers, they apologize and offer a call back. I have a scheduled one now in the next 2 days...we will see how that turns out.

It seems people that work there are very incompetent and can't give me an answer on what needs to be done.
I feel like declaring her net income as 0 and that's it, because she has not worked in Canada or anywhere in the world since she became a *deemed resident* by CRA but not immigration office in 2014...

This is very frustrating and confusing.

I understand what you mean. Some of this stuff just goes over my head and it's so difficult to find the right answers.

May I suggest that you use an accountant very familar with US/Canada taxes. We used an accountant that deals with US/Canada to resolve any possible confusion. My wife is not American but we both lived in US before moving to Canada.

Could you recommend any accountant(s) from your experience? Thanks!

 

[screech339]

I understand what you mean. Some of this stuff just goes over my head and it's so difficult to find the right answers.

Could you recommend any accountant(s) from your experience? Thanks!

Accountant who do your US taxes in canada are expensive to use. The cheapest accountant that we came across were accountants at H&R block. Any accountants outside h&r were quoted much higher than h&r block. So we decided to use them.

I can't really recommend any accountants as we only dealt with the one. So I can't compare.

If you really want to save a lot of money. File the US taxes inside US. Then file Canada taxes in Canada separately.

 

[Rob_TO]

She has never worked in Canada in 2014 but worked for few months in States before she came here (january to april). She got her paper from employer and will do her US taxes with IRS the same way as before.

Here is more info from the website you posted:
A person who is not a resident of Canada for any part of the year, but who visits Canada for a total of 183 days or more in a year, may be deemed to be a resident of Canada, and subject to Canadian income tax on their world wide income for the entire year.

This means she may need to file a tax return in Canada. Any tax she pays will be subject to US/Canada tax treaty (basically meaning she pays tax first in the US on US income, and only after that if she would still owe under Canadian tax rules). If the world income earned wasn't that much, then Canada tax owed may be zero. To file in Canada with no SIN, she would need an Individual Tax Number (ITN): http://www.cra-arc.gc.ca/E/pbg/tf/t1261/t1261-14e.pdf

And also notice they use the word "may", meaning who really knows! CRA can be as confusing as CIC sometimes with vague and non-specific rules. It's best to talk to an accountant experienced with US/Canada couples.

There is also a check box to select that she had no income, if I do that I see a hefty refund of around $2000, which it does not seem right....
Some suggest that we should put whatever the net amount she made in the States, but how is that right when she is filling her own taxes for that with IRS?!

Since she is currently living with you in Canada, then you can definitely claim her under the "spouse amount" on line 303. My interpretation is you will need to use her world income from all of 2014, to determine what the final spouse amount is that you can claim on your own tax return. At $0 income you would earn the max credit which is just under $2000, while once her income is up around $11K the credit is no longer worth anything to you.

Again though I'm no accountant... this is just based on my interpretation of the rules. As long as you are honest about everything to the CRA about her US income, they will re-assess the return if it's required.

 

[o6ocpaka]

Thanks Rob.

I am fully aware about ITN and was suggested not to use it because she has never worked in Canada when she became a *deemed resident*, CRA actually told me on the phone to put in 000 000 000 for her SIN. From what I gather ITN is for those without SIN, but who actually worked in Canada or had any kind of income from Canadian sources, our situation is completely different.

My wife worked in states when she had no ties to Canada at all, and were a total non resident, if you look at my first post there is tax site that suggests to only put international income for the part of the year when you already were a *deemed resident* (more than 183 days and ties to the country).

For example, lets say if she went back to US now to work while waiting for her PR, then yes, she would have to report the income, because at this point - she is an established resident in CRA's eyes (got married, more than 183 days in country, pr in process)

This is how I understand it so far. Hopefully I will meet a person who knows something about this soon....

Fun eh?