scrubbedexpat091

I live in Canada so I get to file return to the IRS as they do desire to have. Up until now I wasn't connected to someone in a way the IRS cared about, but now I am married.

Does my wife's income have to be included on the return at all?

How would government provided non-taxable in Canada, not broken down by individual disability income be dealt with?

We get disability as a family, the province does not break it down by person, the amount is in both our names.

This return is confusing me as its not straight forward as it used to be, and paying an accounting is beyond by financial ability.

Just send it all in, and let the IRS fuss with it?

Its small amount 14,000 in taxable income, and whatever the disability amount was, but under 30,000 in total.

nun

What are the citizenship and residency of you and your spouse?

scrubbedexpat091

Oops. Being up all night, I forgot to include that.

I am USC, resident of Canada, she is Canadian with no ties to the US except by being married to me.

I also have no assets of any sort in the US, if family wasn't there, I'd have no ties at all to the US except citizenship.

Pulaski

The easiest way is to file "married filing separately". Your wife could obtain an ITIN and then you could file "married filing jointly", but that will get messy including her income and then taking a credit for any tax paid, likely with the same result - no taxes payable.

As, from what you have said previously, I doubt you are going to hit the threshold for actually paying taxes to Uncle Sam (currently over $90k, I believe), I doubt it is worth your while to do anything but file "married filing separately".

scrubbedexpat091

Yeah, I come nowhere close to where they start wanting money. I just have to file the stupid return each year to keep the IRS happy.

Steve_

I'd ask the IRS, and the reason being is that the IRS has full access to Canadian tax records, so you cannot hide anything from them.

So if you have income declared on one return and not on the other... disability payments are not earned income, so they're not eligible for the FEIT on Form 2555. Whether it's actually YOUR income though is another question, so I would get the info from the IRS directly. If you file jointly in Canada and singly in the US (thereby reporting different amounts) and the IRS call you out on it, your defence would be that it is your wife's income, but if the IRS wants evidence of that.. well then you need to know what the regulation is chapter and verse. Call them at (267) 941-1000.

I would keep the IRS as much in the dark about your wife as possible, not sure getting an ITIN would be a smart move. But they can still look her up by SIN (but they need a better reason).

And if the IRS say it is reportable and you're going to have to pay taxes on it, then is the time to get hold of the relevant agency in BC and get it paid under your wife's name.

One thing that I've seen trip up a lot of Canadians are RDSPs - these are subject to taxation in the US, they're not recognized under the tax treaty. So I'd be surprised if the disability payment you mention is not a taxable benefit.

scrubbedexpat091

We don't have an RDSP or any savings. I don't save or invest so I can keep my return as simple as possible, not that we have anything to save anyhow...lol

BC ministry issues payments as a family, they can't and won't break down to individuals, we tried before, the adults in the family are both included and no way around that.

I can report everything, won't even hit 40k, so I doubt they would tax it.

Its all so confusing sometimes.

I'll see if the IRS can shed any light on what they want.


If I had the money, I'd hire and accountant to deal with it all.

Steve_

Well it's income and it's clearly not earned income, so in the absence of any exemption it would be subject to income tax. And it's a big enough payment to attract a small amount of tax from the sounds of it.

What the IRS thinks of foreign disability payments when you reside in said foreign country though and they're intended to benefit someone other than the US citizen, I'm not 100% sure.

Filing jointly in Canada and singly in the US would muddy the issue because you could say it is your wife's income and only reported in Canada. Technically though it sounds as though it isn't. I suppose one way around it would be to simply have the bank account the money goes into in your wife's name only. No-one at the ministry of health needs to know. It's her income for her benefit, can't see the IRS would make a big deal out of it.

Problem is if you have say, a T5 slip with both your names on it, the IRS can see that. Whether they would give a crap though, seems unlikely.

rpjs

The BE wiki guide for USC spouses catching up with their tax returns as oart if the IV process recommends filing as "married filing separately" and for spouse's name write "Non-resident alien". That's what my wife did when she had to catch up and the IRS accepted the return without question.

scrubbedexpat091

It's confusing as heck..

Even more confusing as while the paperwork is in both our names, CRA only wants it on 1 spouses income tax return, so in Canada it's only on her return and not mine, they give a choice as to what spouse claims it on their taxes.

I am calling IRS this week to see what they say.

Since we were not married in 2014, and common law in Canada, would the IRS even consider us spouses at that point like CRA does?

We didn't legally marry until March 2015.

Pulaski

From the IRS's view point, if you aren't legally married, with a recorded marriage license, you aren't married. Period. So you can't filed a married return with the IRS until you're filing for tax year 2015

Steve_

Well then you haven't got a problem really. If it's on her return then your US and Canadian returns are consistent.