I'm an H1B resident alien and worked in the US all 2016. My wife worked in Canada in 2016 but moved to the US in Sept. When filing jointly, is she a resident alien?

[christoph]

I am an H1B worker and have been since April 2014, so I pass the substantial presence test.

However, my wife and I were married in August 2016, and she moved to the US in September 2016. She did not work in the US in 2016, but did work in Canada.

Can we:

1. File jointly?

2. Have her treated as a resident alien if we include a statement wishing to be treated as such?

3. Report her worldwide income? Will she be taxed on this in Canada as well as the US? It seems that the US and Canada have a taxation treaty preventing this.

Thanks!

[JenniB]

Because you pass the substantial presence test, you are a "resident alien" for US tax purposes.

If you elect to have her treated as a resident alien (attaching a statement, etc.) 

• You must file jointly this year (the first year you make the election)
• Both of you are taxed on worldwide income

You would report her Canadian income and she will be taxed on this income for US purposes but you can claim a "foreign income tax" deduction or "foreign income tax credit" for her income.

For more information about claiming foreign tax deduction vs foreign tax credit:

https://ttlc.intuit.com/questions/1901623-where-do-i-enter-the-foreign-tax-credit-form-1116-or-deduc...

https://ttlc.intuit.com/questions/2566703-what-qualifies-for-the-foreign-tax-credit

[christoph]

Perfect! Thank you for the help! One more question, does she still claim the standard deduction? Or does claiming a foreign tax deduction make her unable to claim that?

[JenniB]

The "standard deduction" is separate from either foreign tax subtractions.  

So you can file jointly with your spouse and if you are not reporting a lot of itemized deductions (mortgage interest, sales taxes, medical expenses, etc.) you will get the standard deduction that applies for all taxpayers using the married filing jointly status ($12,600 for TY16).

You would separately claim a foreign tax credit or deduction for foreign taxes:

Go to Federal>Deductions&Credits> Estimated and Other Taxes Paid

Under "Estimated and Other Taxes Paid, choose "Foreign Taxes".

[christoph]

Perfect. Thanks TurboTaxJenni!

One final question, does TurboTax allow you to E-File and append the statement saying you'd like to be treated as resident aliens? Or would we need to file by mail?

[JenniB]

Unfortunately you would have to file by mail to attach the statement this year.

Does your wife already have an US tax identification number?  If not, you will also need to complete an W7 application and submit it with the tax return.

<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/fw7.pdf">https://www.irs.gov/pub/irs-pdf/fw7.pdf</a>

[christoph]

That's no problem. My wife received her SSN in March 2017, and we were simply going to use that.

Do we still apply for an tax ID number if her SSN wasn't received in 2016?

[JenniB]

If she has an SSN, you are good to go!

[christoph]

Perfect! Thanks so much for your help!