Filing 2006 Canadian Income Taxes

[zyggy 9]

So, I have been reading this forum, and still am totally clueless. I have always gotten my income tax done by someone else, because , yeah that's right, income tax goes right over my head. My husband (USC) and I went to get our taxes done, and she had no clue how to do mine. She did his, but isn't sure if there are forms of mine that have to be put on his income tax. One form that she used to put on his taxes was form NR4. I also have T3 (Statement of trust income allocations and designations) and the T4E (employment insurance). Do any of the amounts on those forms go on his income tax?? I wasn't employed in the States last year. The only thing I received was employment insurance. I still have residential ties to Canada (bank account, credit card, investments), so does that make me a deemed non-resident?? Also, I wanted to know if the provincial income tax is done in the same way as usual? I'm guessing yes, but what do I know. Last thing (I think), I live right on the US/Canada border. Should I get my Canadian taxes done at H&R block in the States, or just go to Canada to get them done?? I'm seeing mixed reviews about H&R block, but I don't know where else I would go. Sorry for all the strange questions. As you can see, I really don't know anything about doing income tax returns. Hopefully, someone can understand what the heck I'm talking about and get back to me. Thank you for your patience

1) Ok.. you have a ton of questions.. let's try to tackle them one at a time...

Just having a bank account, credit card, etc.. does not make you a deemed resident... If that were the case, a lot of us would be deemed residents... the one thing that would make you a guaranteed deemed resident is if you still had a home in Canada that you haven't rented to anyone else...

In terms of US taxes, you should be filing jointly... never, never, never, never, never file married filing separately unless absolutely necessary... so it's not his taxes.. it's YOUR (together) taxes...

2) Look up the wealth of tax information on this board... you might be able to do it yourself with a little help from a tax program... but if so, I would not go to a normal H&R Block office to do your taxes in the US (unless you were going to see me of course), but you should go to one of their Premium Offices... or better yet, find an accountant who specializes in doing cross border returns...

3) Does your spouse live (or work?) in Canada at the moment... I am guessing that is the case since he got an NR4.. you need to expand a little bit on what your circumstances are and what your status is in the US at this point in time...

Zyggy

Thanks for answering. I know I went here and there with my questions. I didn't know where to begin lol

1) My husband is the US citizen and he (in mean, we ) did file as married. The only income I received was my employment insurance from Canada. Would I have to put any part of that (EI form) on the US income tax??

2) I'm in the Ogdensburg, NY area so very limited on H&R blocks. Would year-round assistance be considered a premium office? Better yet, maybe I can just call them and ask them if they do cross border returns. I'm sure my income tax return is very uncomplicated to do, but I just want to find someone to do them where they are not done wrong. Sure, I'd go see you, but you are probably not very close

3) Since my husband is the US citizen, I'm thinking you mean me with this question. I don't work in Canada. I moved to the States in at the end of June 2006. I got the NR4 for investments I have in Canada. I received my green card Sept 2006. Oh yeah, and about that provincial income tax, I would just do those like before, right? Or is there something specific I would have to do there?

Any other information needed, let me know! Thanks again.

Okay.. this makes a little more sense...

1) Yes.. you do have to include your EI income on your US income taxes that was earned in 2006... However, you can get a Foreign Tax Credit for the 25% non-resident tax that Canada takes... File Form 1113 to get the credit on your 1040..

2) Were your investments in an RRSP... if so, you would have to file Form 8891 the amount to place on the 1040...

3) Any earned income that you earned in 2006 while you were still in Canada is excludable.. You use Form 2555 to exclude the income...

ANy other questions, ask away...

[Dusy 0]

Okay.. this makes a little more sense...

1) Yes.. you do have to include your EI income on your US income taxes that was earned in 2006... However, you can get a Foreign Tax Credit for the 25% non-resident tax that Canada takes... File Form 1113 to get the credit on your 1040..

2) Were your investments in an RRSP... if so, you would have to file Form 8891 the amount to place on the 1040...

3) Any earned income that you earned in 2006 while you were still in Canada is excludable.. You use Form 2555 to exclude the income...

ANy other questions, ask away...

Zyggy,

Well, I booked an appointment with H&R Block. I asked if they did cross border income tax, and there happens to be a Canadian specialist. Sure hope so. I think our US taxes will have to be completely redone. Good thing they weren't mailed out yet.

1) I'm so glad they weren't mailed out. The T4E wasn't put on the US taxes. btw you mentioned form 1113 to be filled out. Is that the form number or is it 1116?

2) The investment I got the N4 for are non-registered and not RRSP. Is there a specific form that would go with that?? Also, I do have RRSPs, am I supposed to be getting something for that?

3) I also didn't think that the income I made while still in Canada had to be put on the 1040 at all, excludable or not. I sure hope that H&R Block lady knows what's she's doing.

No more questions for now. I will let H&R do the work now. I thank you very much for the help. I really do appreciate it. Take care

[Flames9_RN 358]

Like I stated earlier, I saw H&R Blocks Cdn/USa specialist, and he knew nothing. Your doing right though in getting some info prior to stepping in their doors, if you feel they are clueless like mine was, thank them for their time, and find some one else! lol

http://forums.serbinski.com/index.php?sid=...a85c196f424a651 I know one member had a problem with Serbinski doing their taxes, but they only host the forum, lot of good info on there

[zyggy 9]

Okay.. this makes a little more sense...

1) Yes.. you do have to include your EI income on your US income taxes that was earned in 2006... However, you can get a Foreign Tax Credit for the 25% non-resident tax that Canada takes... File Form 1113 to get the credit on your 1040..

2) Were your investments in an RRSP... if so, you would have to file Form 8891 the amount to place on the 1040...

3) Any earned income that you earned in 2006 while you were still in Canada is excludable.. You use Form 2555 to exclude the income...

ANy other questions, ask away...

Zyggy,

Well, I booked an appointment with H&R Block. I asked if they did cross border income tax, and there happens to be a Canadian specialist. Sure hope so. I think our US taxes will have to be completely redone. Good thing they weren't mailed out yet.

1) I'm so glad they weren't mailed out. The T4E wasn't put on the US taxes. btw you mentioned form 1113 to be filled out. Is that the form number or is it 1116?

2) The investment I got the N4 for are non-registered and not RRSP. Is there a specific form that would go with that?? Also, I do have RRSPs, am I supposed to be getting something for that?

3) I also didn't think that the income I made while still in Canada had to be put on the 1040 at all, excludable or not. I sure hope that H&R Block lady knows what's she's doing.

No more questions for now. I will let H&R do the work now. I thank you very much for the help. I really do appreciate it. Take care

Oh okay.. if it's not RRSP, then it would be reported on your US return as a normal Capital Gain on Schedule D... Take the Foreign Tax Credit on the Capital Gains that Canada took out though... And yes.. it's 1116... damn number pad...

When you have an RRSP, you have to get taxed on the amount of gain that is inside it. However, you can elect to defer getting taxed on it until you withdraw it. You make this election on Form 8891 as well. You need to know the amount in the account as of December 31...

Since you got your Green Card in September, you are considered to have been a resident alien for the entire tax year and therefore must report your worldwide income for that year on Line 7. However, you can exclude the income that was made in Canada by filing Form 2225 with your return up to $84,200. This amount is reduced ratio of the amount of time that you were actually in Canada to the year... So If you entered the US on April 1 you would be able to exclude $20,762 of income and $231.68 for each day thereafter.

Edited March 21, 2007 by zyggy

[Flames9_RN 358]

Is there anything Zyggy can't do!!!

[Dusy 0]

Okay.. this makes a little more sense...

1) Yes.. you do have to include your EI income on your US income taxes that was earned in 2006... However, you can get a Foreign Tax Credit for the 25% non-resident tax that Canada takes... File Form 1113 to get the credit on your 1040..

2) Were your investments in an RRSP... if so, you would have to file Form 8891 the amount to place on the 1040...

3) Any earned income that you earned in 2006 while you were still in Canada is excludable.. You use Form 2555 to exclude the income...

ANy other questions, ask away...

Zyggy,

Well, I booked an appointment with H&R Block. I asked if they did cross border income tax, and there happens to be a Canadian specialist. Sure hope so. I think our US taxes will have to be completely redone. Good thing they weren't mailed out yet.

1) I'm so glad they weren't mailed out. The T4E wasn't put on the US taxes. btw you mentioned form 1113 to be filled out. Is that the form number or is it 1116?

2) The investment I got the N4 for are non-registered and not RRSP. Is there a specific form that would go with that?? Also, I do have RRSPs, am I supposed to be getting something for that?

3) I also didn't think that the income I made while still in Canada had to be put on the 1040 at all, excludable or not. I sure hope that H&R Block lady knows what's she's doing.

No more questions for now. I will let H&R do the work now. I thank you very much for the help. I really do appreciate it. Take care

Oh okay.. if it's not RRSP, then it would be reported on your US return as a normal Capital Gain on Schedule D... Take the Foreign Tax Credit on the Capital Gains that Canada took out though... And yes.. it's 1116... damn number pad...

When you have an RRSP, you have to get taxed on the amount of gain that is inside it. However, you can elect to defer getting taxed on it until you withdraw it. You make this election on Form 8891 as well. You need to know the amount in the account as of December 31...

Since you got your Green Card in September, you are considered to have been a resident alien for the entire tax year and therefore must report your worldwide income for that year on Line 7. However, you can exclude the income that was made in Canada by filing Form 2225 with your return up to $84,200. This amount is reduced ratio of the amount of time that you were actually in Canada to the year... So If you entered the US on April 1 you would be able to exclude $20,762 of income and $231.68 for each day thereafter.

Wow, you are just full of info I am so glad I came on here. Our US taxes were done so wrong. It's really a "to do all over again" . So with all that done with the US taxes, are the Canadian taxes done the same way? What about the provincial taxes?

Flames9, thanks for the serbinski site. I'm still checking it out. btw hope you like Falls Church. I lived there many moons ago (in my teen years) and I absolutely loved it.

[Flames9_RN 358]

Okay.. this makes a little more sense...

1) Yes.. you do have to include your EI income on your US income taxes that was earned in 2006... However, you can get a Foreign Tax Credit for the 25% non-resident tax that Canada takes... File Form 1113 to get the credit on your 1040..

2) Were your investments in an RRSP... if so, you would have to file Form 8891 the amount to place on the 1040...

3) Any earned income that you earned in 2006 while you were still in Canada is excludable.. You use Form 2555 to exclude the income...

ANy other questions, ask away...

Zyggy,

Well, I booked an appointment with H&R Block. I asked if they did cross border income tax, and there happens to be a Canadian specialist. Sure hope so. I think our US taxes will have to be completely redone. Good thing they weren't mailed out yet.

1) I'm so glad they weren't mailed out. The T4E wasn't put on the US taxes. btw you mentioned form 1113 to be filled out. Is that the form number or is it 1116?

2) The investment I got the N4 for are non-registered and not RRSP. Is there a specific form that would go with that?? Also, I do have RRSPs, am I supposed to be getting something for that?

3) I also didn't think that the income I made while still in Canada had to be put on the 1040 at all, excludable or not. I sure hope that H&R Block lady knows what's she's doing.

No more questions for now. I will let H&R do the work now. I thank you very much for the help. I really do appreciate it. Take care

Oh okay.. if it's not RRSP, then it would be reported on your US return as a normal Capital Gain on Schedule D... Take the Foreign Tax Credit on the Capital Gains that Canada took out though... And yes.. it's 1116... damn number pad...

When you have an RRSP, you have to get taxed on the amount of gain that is inside it. However, you can elect to defer getting taxed on it until you withdraw it. You make this election on Form 8891 as well. You need to know the amount in the account as of December 31...

Since you got your Green Card in September, you are considered to have been a resident alien for the entire tax year and therefore must report your worldwide income for that year on Line 7. However, you can exclude the income that was made in Canada by filing Form 2225 with your return up to $84,200. This amount is reduced ratio of the amount of time that you were actually in Canada to the year... So If you entered the US on April 1 you would be able to exclude $20,762 of income and $231.68 for each day thereafter.

Wow, you are just full of info I am so glad I came on here. Our US taxes were done so wrong. It's really a "to do all over again" . So with all that done with the US taxes, are the Canadian taxes done the same way? What about the provincial taxes?

Flames9, thanks for the serbinski site. I'm still checking it out. btw hope you like Falls Church. I lived there many moons ago (in my teen years) and I absolutely loved it.

Falls Church is ok,we are just of of Lee Highway, fairly close to Gallows RD. Will do until I'm complted my RN course, then move to MD. On that site I posted, a fellow by the bname of NELSON answers most of the questions. He seems to be airly knowledgeable, bu tcan get grumpy if someone else has asked the same question, lol Best of luck on those taxes.

[zyggy 9]

Okay.. this makes a little more sense...

1) Yes.. you do have to include your EI income on your US income taxes that was earned in 2006... However, you can get a Foreign Tax Credit for the 25% non-resident tax that Canada takes... File Form 1113 to get the credit on your 1040..

2) Were your investments in an RRSP... if so, you would have to file Form 8891 the amount to place on the 1040...

3) Any earned income that you earned in 2006 while you were still in Canada is excludable.. You use Form 2555 to exclude the income...

ANy other questions, ask away...

Zyggy,

Well, I booked an appointment with H&R Block. I asked if they did cross border income tax, and there happens to be a Canadian specialist. Sure hope so. I think our US taxes will have to be completely redone. Good thing they weren't mailed out yet.

1) I'm so glad they weren't mailed out. The T4E wasn't put on the US taxes. btw you mentioned form 1113 to be filled out. Is that the form number or is it 1116?

2) The investment I got the N4 for are non-registered and not RRSP. Is there a specific form that would go with that?? Also, I do have RRSPs, am I supposed to be getting something for that?

3) I also didn't think that the income I made while still in Canada had to be put on the 1040 at all, excludable or not. I sure hope that H&R Block lady knows what's she's doing.

No more questions for now. I will let H&R do the work now. I thank you very much for the help. I really do appreciate it. Take care

Oh okay.. if it's not RRSP, then it would be reported on your US return as a normal Capital Gain on Schedule D... Take the Foreign Tax Credit on the Capital Gains that Canada took out though... And yes.. it's 1116... damn number pad...

When you have an RRSP, you have to get taxed on the amount of gain that is inside it. However, you can elect to defer getting taxed on it until you withdraw it. You make this election on Form 8891 as well. You need to know the amount in the account as of December 31...

Since you got your Green Card in September, you are considered to have been a resident alien for the entire tax year and therefore must report your worldwide income for that year on Line 7. However, you can exclude the income that was made in Canada by filing Form 2225 with your return up to $84,200. This amount is reduced ratio of the amount of time that you were actually in Canada to the year... So If you entered the US on April 1 you would be able to exclude $20,762 of income and $231.68 for each day thereafter.

Wow, you are just full of info I am so glad I came on here. Our US taxes were done so wrong. It's really a "to do all over again" . So with all that done with the US taxes, are the Canadian taxes done the same way? What about the provincial taxes?

Flames9, thanks for the serbinski site. I'm still checking it out. btw hope you like Falls Church. I lived there many moons ago (in my teen years) and I absolutely loved it.

For the Canadian taxes, you have to file a "Leaving Canada" return, you do this by doing a normal T1 and placing the date that you left Canada on the front page. You only have to inlcude the income that you made while you were in Canada, but your deductions have to be reduced by the time you were in Canada... You send the Leaving Canada return to the Internatioal Tax Services Office in Ottawa. Read the great guide Emigrants and Income Tax on the CCRA website. They give you tons of info...

http://www.cra-arc.gc.ca/E/pub/tg/t4056/t4056-e.html

For Provincial.. I assume that you previously lived in Quebec?... since every othe rprovince attaches with the Federal return...

If so, there is a spot on the Quebec Return that includes the date that you left Canada and the reason why... You would do your taxes the same way.. only report the income that you earned while you were resident in Canada and reduce the deductions by the ratio of days that you were in Canada..

Edited March 21, 2007 by zyggy

[Dusy 0]

For the Canadian taxes, you have to file a "Leaving Canada" return, you do this by doing a normal T1 and placing the date that you left Canada on the front page. You only have to inlcude the income that you made while you were in Canada, but your deductions have to be reduced by the time you were in Canada... You send the Leaving Canada return to the Internatioal Tax Services Office in Ottawa. Read the great guide Emigrants and Income Tax on the CCRA website. They give you tons of info...

http://www.cra-arc.gc.ca/E/pub/tg/t4056/t4056-e.html

For Provincial.. I assume that you previously lived in Quebec?...

Would the H&R Block rep be able to do the Canadian Taxes too?? And yes, you assume right. I lived in Montreal.

[zyggy 9]

For the Canadian taxes, you have to file a "Leaving Canada" return, you do this by doing a normal T1 and placing the date that you left Canada on the front page. You only have to inlcude the income that you made while you were in Canada, but your deductions have to be reduced by the time you were in Canada... You send the Leaving Canada return to the Internatioal Tax Services Office in Ottawa. Read the great guide Emigrants and Income Tax on the CCRA website. They give you tons of info...

http://www.cra-arc.gc.ca/E/pub/tg/t4056/t4056-e.html

For Provincial.. I assume that you previously lived in Quebec?...

Would the H&R Block rep be able to do the Canadian Taxes too?? And yes, you assume right. I lived in Montreal.

H&R Block in the US does not have access to the Canadian Tax Program as far as I know... I know we do not have access to it in our office... They may send your information to an office in Canada for that portion...

[knowledge 0]

If your spouse is not resident in Canada, you do not include their income on the Canada T1. For their SIN you put US Citizen and include a statement in your return that your spouse is not a resident of Canada.

Difficult to find the equivalent of "married but separate" (mentionned above by reba) rule for US taxes, i search on behalf of my hubby (USC), he mentionned publications 501 and 519, did not finish to read the last and longer one; i reffered him to this thread but still is not clear for him...Anyone can guide us? as of where is the rule or section? Thanks.

[zyggy 9]

If your spouse is not resident in Canada, you do not include their income on the Canada T1. For their SIN you put US Citizen and include a statement in your return that your spouse is not a resident of Canada.

Difficult to find the equivalent of "married but separate" (mentionned above by reba) rule for US taxes, i search on behalf of my hubby (USC), he mentionned publications 501 and 519, did not finish to read the last and longer one; i reffered him to this thread but still is not clear for him...Anyone can guide us? as of where is the rule or section? Thanks.

You actually NEVER want to file as married filing seperate unless absolutely necessary (like you're separated and your wife is not playing ball)... your question is far too general to give you any specific guidance... please elaborate on what you want to do...

[knowledge 0]

If your spouse is not resident in Canada, you do not include their income on the Canada T1. For their SIN you put US Citizen and include a statement in your return that your spouse is not a resident of Canada.

Difficult to find the equivalent of "married but separate" (mentionned above by reba) rule for US taxes, i search on behalf of my hubby (USC), he mentionned publications 501 and 519, did not finish to read the last and longer one; i reffered him to this thread but still is not clear for him...Anyone can guide us? as of where is the rule or section? Thanks.

You actually NEVER want to file as married filing seperate unless absolutely necessary (like you're separated and your wife is not playing ball)... your question is far too general to give you any specific guidance... please elaborate on what you want to do...

Now i'm more confused ...i'm the beneficiary living in Canada, as i said, my hubby, living in US, can not find that info.for his US taxes....Ziggy, why "never"? file separate as we live separately now...or in other words...what and where to find the applicable rule for our situation? Of the research i began to do, i understand one can not file joint unles they live together in the US correct?...or, what qualifies to file joint or separate? the basics...and where to find this info in the instructions...that i can give it to my hubby...thanks a lot!

[zyggy 9]

If your spouse is not resident in Canada, you do not include their income on the Canada T1. For their SIN you put US Citizen and include a statement in your return that your spouse is not a resident of Canada.

Difficult to find the equivalent of "married but separate" (mentionned above by reba) rule for US taxes, i search on behalf of my hubby (USC), he mentionned publications 501 and 519, did not finish to read the last and longer one; i reffered him to this thread but still is not clear for him...Anyone can guide us? as of where is the rule or section? Thanks.

You actually NEVER want to file as married filing seperate unless absolutely necessary (like you're separated and your wife is not playing ball)... your question is far too general to give you any specific guidance... please elaborate on what you want to do...

Now i'm more confused ...i'm the beneficiary living in Canada, as i said, my hubby, living in US, can not find that info.for his US taxes....Ziggy, why "never"? file separate as we live separately now...or in other words...what and where to find the applicable rule for our situation? Of the research i began to do, i understand one can not file joint unles they live together in the US correct?...or, what qualifies to file joint or separate? the basics...and where to find this info in the instructions...that i can give it to my hubby...thanks a lot!

Actually no... your US spouse can opt to treat you as a resident alien for the entire tax year and you can file a joint return. You would have to report your Canadian income on Line 7 of your US 1040, but you can subsequently exclude your foreign income by filing Form 2555 and subtracting out your foreign income on Line 22 (unless you made over $82,400 last year)... so your joint AGI would be the same as your husband's AGI if he filed separately...

However, you'll be able to take an additional $3,300 personal exepmtion for you as well as claim the larger $10,300 standard exemption... doing this could result in a larger refund in line with about $1,500 to $2,000...

Filing as married filing separate puts you at a huge disadvantage in terms of deductions and other ways of figuring your tax (higher tax table, putting you in a higher tax bracket, etc...)... don't file it unless absolutely necessary... US Taxes are not like Canadian Taxes where it doesn't matter.. each person does their own... the IRS wants married couples to file joint and put in penalties if they don't... there are isolated and special instances where filing seperate makes sense, but your situation isn't one of them...

To make the option, he will have to file a statement with his US Tax Return and send it by mail to his Service Center. If you don't have a SSN, he'll have to file a W-7 to get you an ITIN as well. If you have RRSP's, you'll have to file a 8891 with your return to defer the taxes paid on the amount you esarned in your RRSP... you just check off boxes 6a and 6c and file the form with your return...

The publication you're looking for is Pub 519... http://www.irs.gov/publications/p519/index.html

An excerpt

Nonresident Spouse Treated as a Resident

If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U.S. resident. This includes situations in which one spouse is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other spouse is a nonresident alien at the end of the year.

If you make this choice, you and your spouse are treated for income tax purposes as residents for your entire tax year. Neither you nor your spouse can claim under any tax treaty not to be a U.S. resident. You are both taxed on worldwide income. You must file a joint income tax return for the year you make the choice, but you and your spouse can file joint or separate returns in later years.

Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. It should contain the following information.

A declaration that one spouse was a nonresident alien and the other spouse a U.S. citizen or resident alien on the last day of your tax year, and that you choose to be treated as U.S. residents for the entire tax year.

The name, address, and identification number of each spouse. (If one spouse died, include the name and address of the person making the choice for the deceased spouse.)

Resident Aliens

Resident aliens may be able to exclude the following items from their gross income.

Foreign Earned Income and Housing Amount

If you are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, you may qualify for the foreign earned income exclusion. The exclusion is $80,000. In addition, you may be able to exclude or deduct certain foreign housing amounts. You may also qualify if you are a bona fide resident of a foreign country and you are a citizen or national of a country with which the United States has an income tax treaty. For more information, see Publication 54.

This publication was published for the 2005 tax year, the exclusion is $82,400 for the 2006 tax year

Edited March 28, 2007 by zyggy

[knowledge 0]

If your spouse is not resident in Canada, you do not include their income on the Canada T1. For their SIN you put US Citizen and include a statement in your return that your spouse is not a resident of Canada.

Difficult to find the equivalent of "married but separate" (mentionned above by reba) rule for US taxes, i search on behalf of my hubby (USC), he mentionned publications 501 and 519, did not finish to read the last and longer one; i reffered him to this thread but still is not clear for him...Anyone can guide us? as of where is the rule or section? Thanks.

You actually NEVER want to file as married filing seperate unless absolutely necessary (like you're separated and your wife is not playing ball)... your question is far too general to give you any specific guidance... please elaborate on what you want to do...

Now i'm more confused ...i'm the beneficiary living in Canada, as i said, my hubby, living in US, can not find that info.for his US taxes....Ziggy, why "never"? file separate as we live separately now...or in other words...what and where to find the applicable rule for our situation? Of the research i began to do, i understand one can not file joint unles they live together in the US correct?...or, what qualifies to file joint or separate? the basics...and where to find this info in the instructions...that i can give it to my hubby...thanks a lot!

Actually no... your US spouse can opt to treat you as a resident alien for the entire tax year and you can file a joint return. You would have to report your Canadian income on Line 7 of your US 1040, but you can subsequently exclude your foreign income by filing Form 2555 and subtracting out your foreign income on Line 22 (unless you made over $82,400 last year)... so your joint AGI would be the same as your husband's AGI if he filed separately...

However, you'll be able to take an additional $3,300 personal exepmtion for you as well as claim the larger $10,300 standard exemption... doing this could result in a larger refund in line with about $1,500 to $2,000...

Filing as married filing separate puts you at a huge disadvantage in terms of deductions and other ways of figuring your tax (higher tax table, putting you in a higher tax bracket, etc...)... don't file it unless absolutely necessary... US Taxes are not like Canadian Taxes where it doesn't matter.. each person does their own... the IRS wants married couples to file joint and put in penalties if they don't... there are isolated and special instances where filing seperate makes sense, but your situation isn't one of them...

To make the option, he will have to file a statement with his US Tax Return and send it by mail to his Service Center. If you don't have a SSN, he'll have to file a W-7 to get you an ITIN as well. If you have RRSP's, you'll have to file a 8891 with your return to defer the taxes paid on the amount you esarned in your RRSP... you just check off boxes 6a and 6c and file the form with your return...

The publication you're looking for is Pub 519... http://www.irs.gov/publications/p519/index.html

An excerpt

Nonresident Spouse Treated as a Resident

If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U.S. resident. This includes situations in which one spouse is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other spouse is a nonresident alien at the end of the year.

If you make this choice, you and your spouse are treated for income tax purposes as residents for your entire tax year. Neither you nor your spouse can claim under any tax treaty not to be a U.S. resident. You are both taxed on worldwide income. You must file a joint income tax return for the year you make the choice, but you and your spouse can file joint or separate returns in later years.

Attach a statement, signed by both spouses, to your joint return for the first tax year for which the choice applies. It should contain the following information.

A declaration that one spouse was a nonresident alien and the other spouse a U.S. citizen or resident alien on the last day of your tax year, and that you choose to be treated as U.S. residents for the entire tax year.

The name, address, and identification number of each spouse. (If one spouse died, include the name and address of the person making the choice for the deceased spouse.)

Resident Aliens

Resident aliens may be able to exclude the following items from their gross income.

Foreign Earned Income and Housing Amount

If you are physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months, you may qualify for the foreign earned income exclusion. The exclusion is $80,000. In addition, you may be able to exclude or deduct certain foreign housing amounts. You may also qualify if you are a bona fide resident of a foreign country and you are a citizen or national of a country with which the United States has an income tax treaty. For more information, see Publication 54.

This publication was published for the 2005 tax year, the exclusion is $82,400 for the 2006 tax year

How can we thank you ziggy, and...owe you? ...i'll inform hubby about your post...and me..need to read it more carefully (with my english)...and for me can taxes that all be consistent...!!!!