Backfiling taxes before becoming a LPR

[mikebike 9]

Hi all,

 

So I had an accountant do my 2019 taxes and found out my wife and I get a large refund for child tax credits. Because of this, I'm looking to backfile mine and my wife's taxes from 2017 and 2018 and I have a few questions.

 

I became a legal permanent resident in November 2019.

 

1) When we backfile, I need to file as married-filing-jointly. Will this affect anything in terms of the stimulus payment we received this year?

2) Should I just use my current SSN even though I wouldn't have had one in 2017/2018? Do I need to attach a letter explaining to the IRS that I was a non-resident alien and want to be treated as a resident alien for tax purposes?

2) We were both living in Canada and I had a TFSA but my wife (US citizen) did not. Since we are filing jointly, is my TFSA interest and capital gains treated as a foreign trust and subject to such taxes? 

 

Thank you!

[geowrian 22,337]

1 hour ago, mikebike said:

1) When we backfile, I need to file as married-filing-jointly. Will this affect anything in terms of the stimulus payment we received this year?

There is no "need" to file MFJ. You can choose to file MFS. MFJ is probably better, but the use of the word "need" is incorrect.

The stimulus payment is an advance of a new tax credit on the 2020 tax return. If you end up being over-credited, the excess will be forgiven. If you end up with a credit greater than the advance, you will get the remaining portion a that time.

tldr: It won't hurt anything.

 

1 hour ago, mikebike said:

2) Should I just use my current SSN even though I wouldn't have had one in 2017/2018? Do I need to attach a letter explaining to the IRS that I was a non-resident alien and want to be treated as a resident alien for tax purposes?

Yes, you use your SSN. That number just identifies you...when it was issued doesn't matter.

Yes, if you were an NRA wanting to be treated as an RA as a spouse of a USC, you need to include the letter. See https://www.irs.gov/individuals/international-taxpayers/nonresident-alien-spouse.

 

NOTE1: I'm assuming you were married on or before Dec. 31st, 2017. Obviously you cannot file jointly for a year when you were not yet married.

 

NOTE2: Keep in mind both of your worldwide incomes must be reported for any year where you file jointly. The FEIE may apply to exclude the taxes on that income, up to ~$100k.

 

1 hour ago, mikebike said:

2) We were both living in Canada and I had a TFSA but my wife (US citizen) did not. Since we are filing jointly, is my TFSA interest and capital gains treated as a foreign trust and subject to such taxes?

2 again? 😆

 

I will defer to others for specifics of Canadian accounts. That said, my brief understanding from other threads is that the TFSA interest qualifies as income and therefore must be reported as such.

 

One important note...

It seems like you are trying to claim the child tax credit (CTC)for previous years. Note that to do so, you cannot claim the FEIE as well. So you may end up owing more as you would be counting both of your worldwide incomes. That said, you can claim the FTC + CTC. You would have to run the numbers to determine which is more beneficial.

https://www.hrblock.com/expat-tax-preparation/resource-center/filing/credits/child-tax-credit-abroad/

[mikebike 9]

13 hours ago, geowrian said:

There is no "need" to file MFJ. You can choose to file MFS. MFJ is probably better, but the use of the word "need" is incorrect.

The stimulus payment is an advance of a new tax credit on the 2020 tax return. If you end up being over-credited, the excess will be forgiven. If you end up with a credit greater than the advance, you will get the remaining portion a that time.

tldr: It won't hurt anything.

 

Yes, you use your SSN. That number just identifies you...when it was issued doesn't matter.

Yes, if you were an NRA wanting to be treated as an RA as a spouse of a USC, you need to include the letter. See https://www.irs.gov/individuals/international-taxpayers/nonresident-alien-spouse.

 

NOTE1: I'm assuming you were married on or before Dec. 31st, 2017. Obviously you cannot file jointly for a year when you were not yet married.

 

NOTE2: Keep in mind both of your worldwide incomes must be reported for any year where you file jointly. The FEIE may apply to exclude the taxes on that income, up to ~$100k.

 

2 again? 😆

 

I will defer to others for specifics of Canadian accounts. That said, my brief understanding from other threads is that the TFSA interest qualifies as income and therefore must be reported as such.

 

One important note...

It seems like you are trying to claim the child tax credit (CTC)for previous years. Note that to do so, you cannot claim the FEIE as well. So you may end up owing more as you would be counting both of your worldwide incomes. That said, you can claim the FTC + CTC. You would have to run the numbers to determine which is more beneficial.

https://www.hrblock.com/expat-tax-preparation/resource-center/filing/credits/child-tax-credit-abroad/

Thanks so much for the detailed reply, that pretty much answers all of my questions. Much appreciated!