Canadian citizen in US on a TN visa

toastedcoconut · Post by **toastedcoconut** » Wed Feb 22, 2012 5:22 am

Thanks in advance for the help. I've been trying to gather information for the upcoming tax return, and would just like a pair of eyes to make sure that I've got things clear.

Background:
I graduated June of 2011 in Canada, and started full time work in the United States mid-July. I've had no income of any kind in Canada for 2011. In 2010, I worked in the US for about 100 days on a J-1 visa.

I am single, my parents still live in Canada in a permanent home, and I have several bank accounts and RRSPs in my name there.

So from my understanding so far:
1. Canadian side: I am and should still be considered a resident of Canada and thus will report my US income on my Canadian return and just apply the US taxes as credit, i.e. don't file departure forms
2. US side: Standard state tax return. For federal, I can still be considered a non-resident since I've been in the US for less than 183 days in 2011, and my previous term (the J-1) is exempt and does not contribute to this count. So I can either file the 1040EZ or 1040NR + 8840, whichever ends up lower. Does Medicare + SS exemption factor in either of those two choices?

Am I on the right track here? I'm kind of feeling I should just get an accountant.

nelsona · Post by **nelsona** » Wed Feb 22, 2012 7:50 am

1. Incorrect. You live and work in US. period. You left canada as soon as you went to work. You have no dependants in canada. mummy and daddy's house don't count anymore as a tie. File a departure return in canada

2. Wrong again. 8840 is for those who do meet SPT (you said you don't) and for those with closer connection to canada (you don't).

So your choices are 1040NR, dual 1040NR/1040, or full year 1040.

Given that you earned no income before moving, then full 1040 is your best bet, as all software cazn handle this.

toastedcoconut · Post by **toastedcoconut** » Wed Feb 22, 2012 3:38 pm

Thanks

Are there any implications for my existing bank/RRSP accounts in Canada, or can I just maintain them as they are with my parents' residence as the mailing address

And suppose I see a possibility of returning to Canada within a couple of years, are there any advantages to not severing ties now?

nelsona · Post by **nelsona** » Wed Feb 22, 2012 5:52 pm

No. RRSPs held by US residents MUST be declared to the custodian, who will determine if they will keep you as an active account.

You should be moving to a brokerage (TDW and RBCDirect) that is allowed to work with US clients.

Your bank accounts are fine, but you need to advise themn that you are non-resident.

JGCA · Post by **JGCA** » Wed Feb 22, 2012 6:24 pm

As an important addition with respect to RRSP you will also need to file in addution to the US 1040 form 8891 disclosing the RRSP and election to defoer tax on the accumulated earnings inside it for EVERY year you hold teh RRSP . Also any foreign bank accounts you hold in Canada you will also need to report to the IRS is the value is over $10,000 US FBAR requirements this too is done annually.

toastedcoconut · Post by **toastedcoconut** » Wed Feb 22, 2012 8:23 pm

Thanks again

Looks like my plan of action is
1. Canadian departure tax return
2. 1040-EZ return for US
3. CA State return
4. 8891 for my RRSPs
5. TDF 90-22.1 for my bank accounts worth over $10k

toastedcoconut · Post by **toastedcoconut** » Wed Feb 22, 2012 8:52 pm

Ugh, I also just remembered I've been contributing to a TFSA prior to entering the US. Am I going to have to deal with a 3520 filing as well?

JGCA · Post by **JGCA** » Wed Feb 22, 2012 11:10 pm

Don't contribute to the TFSA because while it is tax free in Canada it will be subject to tax in the US it is not sheltered like an RRSP so you will pay tax on income in US and get no credit for it in Canada.

nelsona · Post by **nelsona** » Thu Feb 23, 2012 10:46 am

Close the TFSA. NOw.