Hello,

I need expert advise on filing US taxes.

I am a US resident alien. Got married last year. Wife lives and works in Canada; she visits me once/twice a month on weekends, but has never lived or worked in US. She also does not have SSN or ITIN.
My income $94K; wife's income $136K.
Wife has already filed taxes in Canada.

1) Under married filing jointly (MFJ) should I fill form 2555 Earned foreign income exclusion for wife's income, or should I fill Foreign tax credit using form 1116. Or do no I need to fill both forms 2555 and 1116?
2) Do I need ITIN # prior to filing return or can I fill W-7 form for ITIN and send along with return?
3) Which would be more tax beneficial in my case - married filing separately (MFS) or married filing joint (MFJ)?

Thank you and regards.

I would have to model all three ways (only Form 2555, only Form 1116, or BOTH Forms 2555 and 1116) to determine which is the best way.

ANY of the three ways listed above would require your wife apply for and be issued an ITIN.

You CAN file MFS without her having an ITIN by manually printing "NRA" (for Non-Resident Alien) where her SSN would go, but then the return MUST be mailed; on-line filing will never be possible.

If you ant my professional help, this IS what I do! Please double-click on my name (Atlanta Tax Expert) above to access my profile. You will find my email address in the signature portion of the profile (scroll down to the BOTTOM of the page).

Thanks AtlantaTaxExpert for the help.

Glad to help!

its pretty simple
MFJ (form 2555+form 1116)
combined gross income = 94K+136K = 230K
use form 2555 to get foreign income exclusion: 136,000-95,100 = 40,900.
use excess amount of 40,900 onto form 1116 to get foreign tax credit (approx 8,500 credit)
adjusted income = 230,000 – 95,100= 134,900
std deductions for married filing jointly = 11,900
exemptions = 7,600
taxable income = 134,900-11,900-7,600=115,400
25% tax = 28,850
assuming 15K tax deducted from your pay, tax due = 28,850-15,000=13,850
deduct foreign credit, tax due = 13,850-8,500= 5,350

MFJ (form 1116)
combined gross income = 94K+136K = 230K
taxable income = 230K-11,900-7,600 = 210,500
after 28% tax = 58940
assuming 15K tax deducted from your pay, tax = 43,940
foreign credit = approx 27,500
tax due = 16,440

MFS
Gross income = 94K
Std deduction = 5,950
Exemption = 3,800
Taxable income = 94K-5,950-3,800 = 84,250
25% tax = 21,062
Assuming 15K tax deducted from source pay, tax due = 6,062

MFJ seems best option for you. >email removed<

At first glance, I agree that filing jointly seems to be the best option, but I would want to run the figures myself to make sure there are no AMT considerations.