Texas Worker and Resident Commutes to Canada where wife

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I have sent you a question before on reporting of RRSP/bank accounts in excess of 10000 US dollars in Canada to US IRS but i am not a US citizen nor resident but H-1B visa holder (Canadian resident).
For tax purposes in the US, i do file 1040 form because my stay in the USA has been more than 3 years. My wife is H4 visa but lives in canada permeantly with the kids.
I have filed joint return in US with her tax ID # but not SS# since 2000
returns to date, only me have SS#(the husband). last year she started work as
real estate agent in canada and started making income.
Since she is not resident in US but with H4 visa, she is not allowed to work in
US but can go to school. In my filing US return, how do i report her income
since i had been filing joint return in US (2000 - 2002), 
1. Do i change to head of household option now and report my own income only in
US tax return and leave her out.
2. On canadian return, worldwide income is what we know we have to report (
both myself and wife)
what is ur advice for best tax benefit and foreign tax credits in canada.
Thank
KXXXXXXXXXXX
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david ingram replies:
FIRST -  Please never reply to a CEN-TAPEDE - it takes too long to pull the message out because the system does not want to accept a message from anyone but me to stop it from becoming a Spam distributor.
To answer your questions:
1.   You are not a head of household.  Either file a joint return and report your wife's Canadian Income on the US 1040 and claim foreign tax credits on form 1116 or file as married filing separately.  
Because you are filing as a resident of Canada and your ultimate tax bill is in Canada and you do not have a Texas return, the tax paid to the US will all be credited to your Canadian return.  You could spend hours and fill out a hundred forms trying to reduce your US tax only to pay the same amount and more to Canada.  
Few people can adequately file your US Canada returns and you should have the same person do both for simplicity and cost effectiveness.  We do these by mail, fax, courier or email scanned documents.
Gary Gauvin, former manager of my old Ottawa office is also more than qualified and is based in Texas.
Whatever you (or anyone else) do, make sure that you do not give your return to a Canadian company that sends the American part off to another company or to an American company that send the Canadian part off to another office or affiliate in Canada.  Our office has five people with a combined 80 years of US / Canada income tax preparation experience. We do both at the same time and because we also have four licenced realtors in the office, understand realtor tax returns as well as anyone else and specialize in cross border real estate taxation.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321 
New email to [email protected]
www.centa.com www.david-ingram.com
Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
 
This from "ask an income tax and immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with:
multi jurisdictional cross and trans border expatriate problems  for the United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc.
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