Hi,

Please help me understand how to file my taxes (none of the online software, like TurboTax, TaxCut, etc... seem to be able to handle this proprely)

I'm an H1 visa holder; I'm working and living in US since 09/2007.
My wife has been living and working in Canada in almost all 2008 (360 days - minus vacations)

I want to file as Married Jointly.

Can you please verify whether my understanding is correct:
1. I am considered resident-alient
2. My wife is considered resident-alien since I'm filing married jointly.
3. We both need to file our worldwide income.

Here's what's not clear:
a. How do I report my wife's income? (she obviously doesn't have W-2)
b. Can/Should I file for Foreign Income Tax Exclusion or file for Foreign Income Tax credit for my wife (she paid taxes in Canada). Tax Exclusion seems like the easiest, since her income is less than $87,000 and thus can be deducted as a whole without going into details of how much taxes she paid in Canada.
b.1 What forms should I file?

Thanks!

1. Yes
2. yes
3. Yes

a. You do not need W2. Report on the basis of whatever record you have-- salary statements, bank statements, employer's statement
b. Yes, if she meets bona filde residence test or physical presence test.
c. If you can not file Form 2555, then file Form 1116 for foreign tax credit. Read: Your U.S. Tax Return: U.S. Citizen or Resident with Foreign Income

MukatA, thanks for the answer!

Just a clarification about your answer to b:
To file form 2555, does my wife still need to meet the physical presence test, even though we elect to be treated as residents (by virtue of filing married jointly)? In other words, are only "real" residents eligible to file 2555.

Quote:

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Originally Posted by MukatA

b. Yes, if she meets bona filde residence test or physical presence test.

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Reading your answer again, did you mean that needs to meet the bonafide or physical presence test in the foreign country?

Physical presence test IN THE FOREIGN COUNTRY; in her case: Canada.