GREEN CARD holder commutes to work in the US Daily.

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QUESTION: Hi I'm a Canadian Citizen (Permanent Resident US) and Wife is an American Citizen  (Permanent Resident Canada). We are both living in Canada for the past 3 years, I commute on a daily bases to the United States for Employment purposes. My wife and myself have always filed a joint 1040 US return and then divide up (based on income) taxes paid by both of US to figure out our separate T1 returns. But I am now considering filing 1040 married Filing Separately. I know this has a higher tax consequence in the US but it does reduce our Canadian tax bill considerably, and it divides up our income & tax each of us actually paid for our separate T1 returns. Is it a wise decision doing this?. What is CCRA opinion (If any) of us filling separate US 1040's?. also We have two children but pay no Child care expenses related to us working.  Thank you for your time.
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david ingram replies:
In your case, MFS is the only way to go.  It will make your tax preparation much easier and give you more of the foreign tax credit you need to lower your Canadian tax.  However, If your wife has no US income, ALL the foreign tax paid now should b credited to your Canadian return.  
If you exempt her income on a 2555, the tax should (for all practical purposes) be yours.
In other words, if you earn $50,000 in the USA and she earns $30,000 in Canada and you exempt her income (as you should have) all the foreign tax is yours for the credit.
You might want to send me the last couple of years you have done to check them out.
Also make sure you claim "ALL" the foreign taxes - Federal State, FICA and Medicare.
Hope this helps
David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
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This from ask an income tax immigration planning and bankruptcy expert consultant guru or preparer  from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate:
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