Confused whether to file exit / departure tax return w/ CRA

mapleNYC · Post by **mapleNYC** » Tue Apr 26, 2016 9:43 am

Hello,

I'm completely lost when it comes to how all of these tax rules work. I've been living in the USA for the past ~6 years and have been on everything from TN1 (first 6 months) to J1 (~4.5 years) visas and then back to TN1 (am currently on this status for the last ~1 year). The reason I switched to J1 visa was because I was receiving a stipend income for my postdoctoral training from Canada, in addition to a small salary I was receiving in the USA. I have not received any Canadian sourced income since 2014, with all money now coming from USA sources.

This year I filed a 1040 with the USA, and am wondering if I need to file anything wit the CRA. I have a bank account in Canada with very little money (<$1000) and an RRSP which I haven't contributed to in years, nor withdrawn money from.

Does anyone have any advice on how I should proceed with the CRA? Now that I'm no longer receiving Canadian funds, should I try to sever tax ties with Canada?

I apologize for being so naive - people here seem so helpful.
Sincerely,
JD

nelsona · Post by **nelsona** » Tue Apr 26, 2016 9:47 am

You likely could have broken ties from Canada 6 years ago when you moved to US on TN.
What have you been filing in Canada and US since then, year by year

nelsona · Post by **nelsona** » Tue Apr 26, 2016 10:11 am

... and what residential ties (house or spouse) have you had in Canada during that period.

mapleNYC · Post by **mapleNYC** » Tue Apr 26, 2016 10:18 am

Hello nelsona,

Thank-you for your speedy reply.
I went from being a Canadian student in 2010 to a post-doctoral fellow in NYC in the USA on TN1 status in August 2010. In summer 2011 is when I received this award/stipend for my work with 1/2 income being paid to me directly from Canada (to my USA bank account - no taxes were taken off**); the other 1/2 of my income went through my place of work in the USA where all appropriate taxes were taken off. The letters that came with the money that had no tax removed said to make sure to file Canadian returns in order for the appropriate tax to be removed. Because of these different income sources, my workplace told me I had to switch to J1.

for the following USA tax years:
2010: 1040NR (did not meet substantial presence test)
2011: 1040NR (started receiving this 1/2 1/2 money arrangement)
2012: 1040
2013: 1040
2014: 1040 (summer of this year the 1/2 1/2 money arrangement ended; however my workplace kept me on J1 because of ease of paperwork on their end)
2015: 1040 (switched jobs & went back on TN1)

for Canada:
2010: regular T1 tax return
2011: T1 return and owed $$ to Canada since 1/2 the income had no tax taken off
2012: T1 return and owed $$ to Canada since 1/2 the income had no tax taken off
2013: T1 return and owed $$ to Canada since 1/2 the income had no tax taken off
2014: T1 return and owed $$ to Canada since 1/2 the income had no tax taken off
2015: not sure what to do

thanks,
JD

mapleNYC · Post by **mapleNYC** » Tue Apr 26, 2016 10:20 am

Hello - I've had no residential ties to Canada in terms of a house or spouse (I'm single, and have no house in Canada). My parents house is what I used as my permanent address in Canada; however I don't have any possessions there. I do have a bank account with a small amount of money, and an RRSP. All of my possessions are with me in the USA.

nelsona · Post by **nelsona** » Tue Apr 26, 2016 11:34 am

Well it seems pretty simple that for US you should continue filing a 1040. I trust that on EACH 1040 you submitted, you included every penny of your world income, not just US-source, as well as adhered to any foreign account reporting. You really could have just filed 1040NR for all these years once you mistakenly decided to keep filing in Canada in stead of departing in 2010.

So, rather than fix all this, I would just file a departure return for Canada in 2015 with departure date the day you became TN.

nelsona · Post by **nelsona** » Tue Apr 26, 2016 11:35 am

Canada thanks you for the extra tax.

mapleNYC · Post by **mapleNYC** » Tue Apr 26, 2016 11:50 am

Hello nelsona,

I did not include my world income on the 1040 :( I guess I should I correct this with the IRS. It looks like I've gotten myself into a big mess. Do I need to include the RRSP amount on the foreign account reporting?

Should I set my departure date for the first TN I had in 2010 or the one I got in 2015?

I wish I had found this forum earlier. I know that's no excuse, and I really do appreciate your help & answers.

thanks,
JD

nelsona · Post by **nelsona** » Tue Apr 26, 2016 1:35 pm

RRSPs and your bank account are subject to FBAR every year.
RRSPs were subject to form 8891 until 2014, but are no longer.

I would think it will be too much of a bother to do 6 years of amendments for Canada, but you will have to do it for US.

I'll leave it with you. There are many posts about backfillng FBAR, etc.