Need help with 1040NR

[WhitlockCPA]

I am trying to determine whether I need to file 1040NR or 1040 for a Canadian couple.  

 

Married couple both moved from Canada in September 2014 under E2 Visas.  For 2014, wife started a LLC and will file as sole prop.  Husband had W2 income.  They both had income in Canada before moving to US.  

 

I couldn't find a reference in the instructions for the E2 Visa, so cannot figure out if they need to meet the 183 day test to file 1040 as residents.  Should they file 1040NR or 1040? Seems like 1040NR is the easiest  since they didn't have alot of 2014 income and also so we don't have to include the Canadian income.  

 

If they file 1040NR, do they file separate returns?  

 

The wife is telling me her attorney told her they always have to file separately because she has to present her income separately to support the E2 visa. I have a phone call set up with him to verify what this means, but can anyone brief me on this.  I was going to suggest that the LLC elect to be taxed as a S-corp so it can be a separate return and also to avoid some SE tax, but not sure if that would violate any visa requirements.  

 

Thanks! 

[Pacun]

She accumulates physical presence and you should consider what days she was in the US for 2013 and 2012. She is an investor and she has to prove she has a business not only for profit but that she has a lot of money at risk.  These are the only people that do not accumulate physical presence (Students only the first 5 years do not accumulate).

 

Exempt Individual

Do not count days for which you are an exempt individual. The term "exempt individual" does not refer to someone exempt from U.S. tax, but to anyone in the following categories who is exempt from counting days of presence in the U.S.:

• An individual temporarily present in the United States as a foreign government-related individual
• A teacher or trainee temporarily present in the United States under a "J " or "Q " visa, who substantially complies with the requirements of the visa
• A student temporarily present in the United States under an "F, " "J, " "M, " or "Q " visa, who substantially complies with the requirements of the visa
• A professional athlete temporarily in the United States to compete in a charitable sports event