# MFJ versus MFS?



## The_Animal

#1: I don't want the US Government messing around in my Canadian income business. 
#2: My wife is the American citizen, and all the US Government needs to know is that she's the only one that they have the right to demand taxes from. 

In this tax situation, do you think that it would be wiser for her to classify herself as Married Filing Separately? 

Is the added headache from the IRS worth it to get the joint tax exemptions? I don't think so. 

Whoever is up to date on their filing and have a foreign spouse (Canadian citizen); what did you pick? MFS or MFJ?


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## Peg

On my 1040s, I chose Married Filing Separately. My husband is a Canadian. My income was always lower than $35,000 and I used either the Foreign Earned Income exclusion or the Foreign Tax Credit each year.

There is no way that I was sending any of my husband's information --- for Spouse name I wrote NRA (Non-resident alien) as per Bev's input here on the forum.


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## The_Animal

Peg said:


> On my 1040s, I chose Married Filing Separately. My husband is a Canadian. My income was always lower than $35,000 and I used either the Foreign Earned Income exclusion or the Foreign Tax Credit each year.
> 
> There is no way that I was sending any of my husband's information --- for Spouse name I wrote NRA (Non-resident alien) as per Bev's input here on the forum.


My wife makes roughly between $12,000-$14,000 through part-time retail. I make quite a bit less...

I doubt that she wouldn't get her FIE if Marrying Filing Separately. And frankly, I doubt that she wouldn't get a nil-return/refund.


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## Peg

The_Animal said:


> I doubt that she wouldn't get her FIE if Marrying Filing Separately. And frankly, I doubt that she wouldn't get a nil-return/refund.


If she only has earned income the returns are pretty simple. Mine were messy with RRSP withdrawals, self-employment income as well as phantom gains on the RESP.

There is one form that needs to be checked off if you have any foreign bank accounts - don't recall the name but it is the one where you declare interest income.


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## Guest

You can always use 'head of the household' get an ITIN # and claim him/her as an exemption. The problem with the ITIN # is the document notariztion....has to be done in the US or by someone who is authorized in Canada. (ie: cannot get a Canadian lawyer, judge etc to do it).



You can try a US consulate in Canada...again a long waiting list.


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## The_Animal

Peg said:


> If she only has earned income the returns are pretty simple. Mine were messy with RRSP withdrawals, self-employment income as well as phantom gains on the RESP.
> 
> There is one form that needs to be checked off if you have any foreign bank accounts - don't recall the name but it is the one where you declare interest income.


Our sole account is so active (withdrawals) that it doesn't gain interest...) Hell, our bank say it has to be over $50,000 balance before it earns any sort of interest.  And by then I'd be smack into FBAR territory. And yeah, they're welcome to seeing what it is...then I'll smack IRS with a lawsuit because they took a peek at MY banking dealings while they were looking at my wife's. 

"Damned if you do...damned if you don't...sucks to be you...doesn't it, IRS?"


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## Peg

The_Animal said:


> Our sole account is so active (withdrawals) that it doesn't gain interest...) Hell, our bank say it has to be over $50,000 balance before it earns any sort of interest.  And by then I'd be smack into FBAR territory. And yeah, they're welcome to seeing what it is...then I'll smack IRS with a lawsuit because they took a peek at MY banking dealings while they were looking at my wife's.
> 
> "Damned if you do...damned if you don't...sucks to be you...doesn't it, IRS?"


The Schedule B that goes with the 1040 is just a Yes or No to whether you have a foreign account. It does not have a minimum amount. I would not have even filed that form since I did not have interest or dividend income to declare but did it purely to disclose that I had foreign acounts.

We mostly run a line of credit as our chequing and although it does not pay us interest, sometimes it does have a credit balance so I consider that to be an "account". Separately would be the FBAR if she had a combined value of over $10k at any time in the year (combined value meaning all accounts added together must exceed $10k). 

http://www.irs.gov/pub/irs-pdf/f1040sb.pdf bottom of page 1:

You must complete this part if you (a) had over $1,500 of taxable interest or ordinary dividends; (b) had a foreign account; or (c) received a distribution from, or were a grantor of, or a transferor to, a foreign trust. 

7a At any time during 2011, did you have a financial interest in or signature authority over a financial account (such as a bank account, securities account, or brokerage account) located in a foreign country? See instructions . . . . . . . . . . . . . . . . . . . . . . . .
b If “Yes,” are you required to file Form TD F 90-22.1 to report that financial interest or signature authority? See Form TD F 90-22.1 and its instructions for filing requirements and exceptions to those requirements . . . . . . . . . . . . . . . . . . . . . . . . . .


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## Vangrrl

I filed as "single" under my expat accountant's instructions. I am married with a Canadian spouse.

I also only claim my one kid who has an SSN. I don't identify my other child. 

I identified my spouse by name on my back-filed fbar form but going forward I will simply write "Non-resident spouse".

I've had all sorts of income in the past few years - salary income (use income exclusion), dividend (use foreign tax credit), EI/mat leave (foreign tax credit) and some very minimal interest and baby bonus (personal/dependent exemption covered that). I didn't owe any tax on any of the 5 years I filed back.

Another poster has mentioned that turbotax works for expats (although you can't efile). It might be worth giving it a try online and seeing what scenario works out better for her. I will be using it going forward. Better than paying an accountant or having to do it by hand IMO.

Personally, I don't think that fbar fines will be applied based simply on the amount that is in an account - especially a joint account, nor on the number of accounts. Fbar clearly wasn't designed for reporting of people's mundane every day accounts.


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## 416

Vangrrl said:


> Fbar clearly wasn't designed for reporting of people's mundane every day accounts.


You think?


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## Peg

But I reported all of them even those with a $50 balance


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## Mona Lisa76

I've reported some with even a zero balance.


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