1040 or 1040NR on TN1

nyrol · Post by **nyrol** » Mon Jan 25, 2016 11:43 pm

I recently moved to Seattle from Ontario on TN1 status in October of 2015 with my wife. We have no Canadian assets, and I was wondering if I should file a 1040 or a 1040NR. Will I have to report Canadian income before the date I moved to the US if I file a 1040, or is it only foreign income earned after I moved?

Thanks

nelsona · Post by **nelsona** » Tue Jan 26, 2016 7:20 am

You have a choice.
You can either file 1040 joint with your spouse, reporting all income for the year, but being able to clim all the same exclusions deductions and credits that any other taxpayer can, including exempting your Cdn wages.

OR
you can file 1040NR (because you came to US so late in the year) on which you report only your US income.

We've discussed this thoroughly in this forum. Happy browsing.

nyrol · Post by **nyrol** » Tue Jan 26, 2016 11:51 am

Thanks for the reply. I couldn't seem to find a straight answer from searching.

Another question, since my wife can't work in the US, if we file jointly, I'm assuming we would have to report her Canadian income that was made before we got her as well. Due to the tax treaty, since we'll be filing a departure return in Canada, does this mean that all Canadian income is tax exempt? In that it just needs to be reported and we pay all tax to Canada for as long as we were tax residents?

Sorry if this has been asked before. I couldn't find the answer specifically.

Thanks

nelsona · Post by **nelsona** » Tue Jan 26, 2016 2:19 pm

As I said, yours and her Cdn WAGES will be exempted. it is still reported on the 1040. This is done by form 2555. It has nothing to do with the treaty. Any software package will handle this. This would be whether your spouse was able to work in US or not.

Generally, reporting income in one country does not mean you don't have to report it in the other country.

Please read up on departure tax in Canada.

puzon23 · Post by **puzon23** » Wed Jan 27, 2016 12:19 am

Not to add any confusion but... in this situation would you be able to use form 1116 for FTC? Is this even an option? I'm assuming there are situations where FTC is a better option than exclusion via 2555. Of course, I believe that form 1116 is only an option when you do 1040 like a US resident. am I wrong? Any comments?

nelsona · Post by **nelsona** » Wed Jan 27, 2016 7:01 am

Both 2555 and 1116 are available only when doing 1040. That is why I only mention them in connection with filing 1040.

It is always better to use 2555 when moving from one country to another, since FTC will not give full credit.

You would still have to use 1116 on your non-wage income in any event, or on wages that exceeded the exemption limit.

You can run the various options on your software.

nyrol · Post by **nyrol** » Sat Mar 26, 2016 11:32 am

Regarding the Canadian departure return, is it required to report my American income after the date that I reported I left Canada if I opt to also file a 1040 in the US? I have reported my Canadian income on the 1040 for the year. I also received a letter in the mail saying I am no longer a resident and that I owe for the HST credits accrued since July of 2015 (even though I moved in October). Would this mean I was officially deemed as a non-resident for tax purposes? Is it possible to take that amount owing out of the refund I would get (due to tuition credits)?

nelsona · Post by **nelsona** » Mon Mar 28, 2016 10:11 am

Regardless of how you file in US, you are not to report any US-sourced income earned after your departure date on your T1.

As to HST payback, you should handle this separate form your tax return. If you wish to argue that you should have received the October payment that is up to you. Don't mix it with your tax situation.