Life Hack: Taxes…. for 2 Countries

Jump to WHAT WE LEARNED TODAY!

As I near my 30th year, I pay more and more attention to adult stuff… like taxes. Recently the Tub Hubs and I had a nasty time of it sorting out how to file our income tax returns. An after shock of that was how I actually owed tax for the first time in my life. Gone are the good old days when tuition credits saved my butt.

Since the Hubs and I were married in the middle of 2014, it made our tax situation a lot more fun to deal with. Not to mention that as a Canadian who lived in Canada for the first half of 2014, then lived in USA for the second half of 2014… well, I’m sure those of you who’ve had to file taxes in this situation can sympathize…. it goes something like this:

Canadian Tax

Let’s talk about Canadian tax first. I logged on to CRA’s website and used one of their free e-filing software to file my 2014 taxes. It took me about an hour to do (including double-checking & triple-checking).

I end up with a $4000+ tax refund. Awesome, right? I spent another hour double checking the information I input; everything seemed correct. My taxes are very straight forward, I have one job, as does my husband, we do not own a home, and I do not have any RRSPs or Mutual Funds. Just straight income tax with no deductions.

So I thought, hey, maybe I’m getting a giant credit because my husband has $0 income from Canada (he worked in USA for all of 2014). Well, alright then!

I submit the tax return and relaxed. This was at the end of February.

In mid-June, I receive notice from CRA that my income tax return has been reassessed. Instead of getting a whooping refund of $4000 and change, I owed approximately $200.

No biggie… just pay the difference, right?

Nope,  nope, nope.

I also had federal student loans owing, so at the time my return generated a refund, I directed all of it to pay off the student loan.

So by June, I owed about $4500 in tax to the CRA.

USA Tax

Now on the USA side… since I’m residing in USA on a spousal visa that barred me from working (or enjoying most social benefits), I didn’t have a SSN for filing taxes for 2014. Woohoo. I needed to get an ITIN. And boy, is that ever easy to do in America.

First, my husband and I had to file our federal taxes as Married. That’s when I send a W-7 (application for ITIN) form in along with the Federal return.

Then, we wait for 11 weeks (it ended up being more like 6 weeks) for me to receive my ITIN. Once I received it, I was able to file my State tax.

Imagine my surprise when I owned roughly $200 in State Tax for the measly 2 months I lived in USA for 2014.

What did we learn, Kids??

  • Prepare and research your taxes early, especially if something changed for you drastically that year (marriage, graduation, etc.)
  • Residing in 2 different countries sucks balls for reporting taxes.
  • Under US law, you can be considered a non-resident alien for immigration purposes, but a resident alien for tax purposes. They want your money but they don’t want to give you more benefits then they have to.

Adjusting

It definitely takes some adjusting to now that I’m back in Stamford.

Things are quite a bit more complicated now that we’re married. When I look at our taxes and visas, it seems like such a big mess.

Reporting my Canadian taxes seems easy. There’s just one spouse section on which I report that he is not a Canadian citizen/resident and then I just report his income in Canadian dollars.

Reporting our US taxes is going to be  giant pain, and here’s why

  1. We’re both foreign nationals living in USA. He’s Australian and I’m Canadian. So we have to figure out what status to report our taxes under. Technically we’re considered non-immigrants when it comes to our Visas, but for Tax purposes, we are considered resident aliens.
  2. Work. We don’t know how to report income from my work.

I didn’t realise that being married was such a big headache. I suppose it isn’t usually until you marry an Australian and a Canadian together in the USA.

We need an accountant. I’m going to find one that actually doesn’t suck. Hmm. I wonder where I can find a good accountant. Probably through immigration services?