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My Canadian wife and I are both retired. When doing Canadian taxes the two of us are allowed to shift some of her pension income from her return to my return. (There is no married filing jointly in Canada. Everyone submits their own return regardless of marital status.) The effect of this is to lower her pension income thereby getting her into a lower tax bracket. It makes no difference on my return because there is plenty of room between my actual income and the next higher bracket. The result is that collectively all income is taxed at the lowest rate. This is allowed by the Canadian government to give pensioners a bit of a tax break.

My question is regarding my US return. (Being Canadian she has no US tax obligation.) I am assuming there is no need to even go into this splitting business when preparing my US return. The income in question is her income, not my income, therefore isn't relevant to my US return. It was never paid to me, was never in my accounts and is merely a bookkeeping sleight of hand that is allowed by the Canadian tax authority. Have I got this right?
 

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My question is regarding my US return. (Being Canadian she has no US tax obligation.) I am assuming there is no need to even go into this splitting business when preparing my US return. The income in question is her income, not my income, therefore isn't relevant to my US return. It was never paid to me, was never in my accounts and is merely a bookkeeping sleight of hand that is allowed by the Canadian tax authority. Have I got this right?
Right. That's one of the advantages of filing "married, filing separately" and just listing your spouse as NRA. You only need to report income in your name. What she is paid - whether pension or salary - doesn't belong on your return.
Cheers,
Bev
 

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I am in exactly the same situation, maz57, and for 2010 I did mistakenly file claiiming my split of my husband's pension. But it's so low that I didn't owe anything, and so no point in amending it. I did forget Schedule B, and I wont do that again, so am still wondering if I should amend for that reason. But I filed in August and haven't heard anything, so I should be OK-- unless my 2011 return gets flagged for some reason and they check the 2010 (which was my first time filing). Didn't file FBAR last year because i didn't understand the issue then, so this will be my first year filing FBAR. ugh
 
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