Questions about filing for taxes

[Saylin 1,605]

So, I'm still waiting on my NOA2, and with this backlog in Montreal, I doubt I'll be in the USA before April 15th to even have a chance of having an SSN. So, I have a few questions about what my husband (the USC) and I have to do in relation to filing taxes.

I've gathered that my husband has two options, to file married filing separately (MFS) or married filing jointly (MFJ). What exactly is the difference? Do I have to be in the USA for him to even file married filing jointly? And would I need an ITIN for both options or just MFJ? Does he have to report my income that I earned in Canada for 2010? Would it be in Canadian dollars or do I need to convert it to American dollars? And does he need any kind of documentation from me when he files (like a passport, copies of T4 slips or something?). I was also in school for half of the year, does that play a part in him filing taxes at all?

And I pretty much have the same questions for when I have to file taxes here in Canada. Is there an option like MFS and MFJ with Canadian tax returns? When I input in my husband's information, do I have to include his income as well? In Canadian dollars or American?

Anything else I should know about my husband filing taxes in the USA or me filing taxes here in Canada?

I know it's a lot of questions and I'm sure I have more but my head's just buzzing now that I'm thinking about tax returns and would like to have some things straightened out for me, as well as my husband. Thanks in advance for those that answer.

[Inky 1,110]

You have to report canadian income made in canada for your first year in the US. You will need to show it in US dollars, we had ours done professionally because it was really confusing as I also had stocks and that had to be counted as well. You can also apply for some kind of rebate or something because of your canadian income being claimed on joint taxes. We did that and we didnt owe anything extra or more from my income being on it. I had my SSN and was in the US when we filed joint - we used HR block, sorry cant be of much more help D=

oh.. you will file leaving canada tax return when you have your last year in canada too.. I tried to do that and it was a huge mess because my employer refused to send my T4.

[Nile_Romance 5]

Saylin,

I can't speak for the Canadian side but I have done some research on the US side and will share what I know.

• Apr 15 filing date - Every US tax file can get an automatic *no questions asked and not reason required) tax filing extension of 6 months (Apr 15 changes to Oct 15). If you get to April 15ths and don't feel confident or are not prepared to file, this extension is very helpful. The extension request (IRS form 4868 - http://www.irs.gov/pub/irs-pdf/f4868.pdf) must be filed by 4/15 and all anticipated taxes MUST be paid at that time. If you expect a refund, you don't have to pay anything and will get your refund as usual when you file. If you expect to have to "pay in", you must pay the money with the 4868 form and it will count as a tax payment for the year being filed when you eventually file the return.
  
• Married filing jointly (MFJ) - If you (together) file MFJ, it must include both of your incomes and the tax amounts per USD are much lower because it is takes into consideration that this income is for 2 people and not 1. There is some place on the return where you list the taxes you may pay in Canada but I'm not sure how that works.
  
• Married filing separately (MFS) - If your husband files MFS, the tax rates per USD are higher since the income is only for one person.
  
• MFJ vs. MFS - The best choice depends on your particular situation. If your income was significantly lower than his (as you were in school half the year) then MFJ will "most likely" be the best option. I use a PC software program called TurboTax here in the US and I would definitely advise getting this, hiring a tax accountant or both (the year I started my own business I did both because it made me feel more confident in the accountants numbers). Using Turbo Tax is simply a process of answering a long series of question (did you …?, were you…?, how much…?) and it creates the tax forms to file as a result. You can set up more than two scenarios – MFJ vs. MFS and see what the difference is before you make your decision. If you plan to file an extension, you can also get the software, put in your numbers (or approximate numbers) and have it calculate your estimated tax and prepare the 4868 for you.
  
• ITIN - I do not believe you need an ITIN if he files MFS because you are not filing a return so your name/number is not required. If you choose to file MFJ, you DO NOT need to get your ITIN number in advance of your filing. The ITIN application is simply included with your tax return and the whole package is sent to a different IRS office that assigns the ITIN number first and then passes it on for "normal" processing. The ITIN application is IRS form W-7 (http://www.irs.gov/pub/irs-pdf/fw7.pdf) and the W-7 instructions (http://www.irs.gov/pub/irs-pdf/iw7.pdf) clarify what documents need to be included for identification. Obviously if you get a SSN before you file, this is not necessary.
  

I'm no expert but when we get closer to "that time", feel free to contact me and I will be glad to answer any questions I can from my own personal experience (we filed MFJ for 2009).

[Saylin 1,605]

Saylin,

I can't speak for the Canadian side but I have done some research on the US side and will share what I know.

• Apr 15 filing date - Every US tax file can get an automatic *no questions asked and not reason required) tax filing extension of 6 months (Apr 15 changes to Oct 15). If you get to April 15ths and don't feel confident or are not prepared to file, this extension is very helpful. The extension request (IRS form 4868 - http://www.irs.gov/p...s-pdf/f4868.pdf) must be filed by 4/15 and all anticipated taxes MUST be paid at that time. If you expect a refund, you don't have to pay anything and will get your refund as usual when you file. If you expect to have to "pay in", you must pay the money with the 4868 form and it will count as a tax payment for the year being filed when you eventually file the return.
• Married filing jointly (MFJ) - If you (together) file MFJ, it must include both of your incomes and the tax amounts per USD are much lower because it is takes into consideration that this income is for 2 people and not 1. There is some place on the return where you list the taxes you may pay in Canada but I'm not sure how that works.
• Married filing separately (MFS) - If your husband files MFS, the tax rates per USD are higher since the income is only for one person.
• MFJ vs. MFS - The best choice depends on your particular situation. If your income was significantly lower than his (as you were in school half the year) then MFJ will "most likely" be the best option. I use a PC software program called TurboTax here in the US and I would definitely advise getting this, hiring a tax accountant or both (the year I started my own business I did both because it made me feel more confident in the accountants numbers). Using Turbo Tax is simply a process of answering a long series of question (did you …?, were you…?, how much…?) and it creates the tax forms to file as a result. You can set up more than two scenarios – MFJ vs. MFS and see what the difference is before you make your decision. If you plan to file an extension, you can also get the software, put in your numbers (or approximate numbers) and have it calculate your estimated tax and prepare the 4868 for you.
• ITIN - I do not believe you need an ITIN if he files MFS because you are not filing a return so your name/number is not required. If you choose to file MFJ, you DO NOT need to get your ITIN number in advance of your filing. The ITIN application is simply included with your tax return and the whole package is sent to a different IRS office that assigns the ITIN number first and then passes it on for "normal" processing. The ITIN application is IRS form W-7 (http://www.irs.gov/pub/irs-pdf/fw7.pdf) and the W-7 instructions (http://www.irs.gov/pub/irs-pdf/iw7.pdf) clarify what documents need to be included for identification. Obviously if you get a SSN before you file, this is not necessary.

I'm no expert but when we get closer to "that time", feel free to contact me and I will be glad to answer any questions I can from my own personal experience (we filed MFJ for 2009).

Thanks a lot for the reply, it's been helpful!

I don't think filing for an extension would be so great with my husband since he wants money back to buy a new computer, lol. It might be a good idea for others though.

My income was definitely lower than his. I only worked part-time for 3 months this year, so I probably didn't even make $1000, while my husband is currently making $40k.

I also used an online program like you did for the past two years. Much easier than the paper way I believe. I'll suggest to my husband to try out, like you said, to file MFJ and then MFS and see which is the better option.

When you filed MFJ, it didn't ask for any kind of SSN number for your spouse? I remember reading somewhere here that people couldn't use online tax programs since it asked for an SSN number for their spouse and since they didn't have one, they had to do their tax returns on paper.

Oh, and another question, no matter what we decide (MFJ or MFS), I still have to file taxes in my own country, correct?