Hi all,
My wife and I are Canadian citizens, my wife doesn’t work and I’m on a J-1 visa. We moved to the US permanently in September of 2015 and left nothing behind in Canada except for a couple small RRSP’s.
Can I depart Canada if I’m on a J-1 visa? If not, I suppose my wife would file a departure return for 2015 and I would have to wait until I get my TN visa; which will likely be in 2016 or 2017?
Looking for feedback. Thanks.
Departing Canada Confusion
Moderator: Mark T Serbinski CA CPA
check out CRA's website and you can fill out the form NR73 if you prefer CRA to make the decision.
http://www.cra-arc.gc.ca/tx/nnrsdnts/cm ... y-eng.html
I am not sure if it really matters what visa you will be on when you move to a different country.
http://www.cra-arc.gc.ca/tx/nnrsdnts/cm ... y-eng.html
I am not sure if it really matters what visa you will be on when you move to a different country.
Since J-1's (and their J-2 dependents) do not by IRS regs meet the definition of resident alien (because your days in US do not count towards the substantial presence test), neither of you can yet "break" your Cdn residence. that is the first step of the residency tiebreaker in the treaty.
You should both file as Cdn residents and US non-residents.
Ironically, as a Cdn, you are your spouse are allowed if you wish, to either file a normal 1040 joint return, or can even avail your self of the special treaty XXV(2) provision to file a 1040NR but with 1040MFJ tax rates. That should improve your tax situation for US purposes.
Its a quirk in the J status, because technically, you are only a visitor.
But, regardless, you still need to file Cdn tax returns for the province you were last in.
You should both file as Cdn residents and US non-residents.
Ironically, as a Cdn, you are your spouse are allowed if you wish, to either file a normal 1040 joint return, or can even avail your self of the special treaty XXV(2) provision to file a 1040NR but with 1040MFJ tax rates. That should improve your tax situation for US purposes.
Its a quirk in the J status, because technically, you are only a visitor.
But, regardless, you still need to file Cdn tax returns for the province you were last in.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
You can, as was mentioned, each file an NR73 if you wish. You never know
However....
the "Statement of Residency" questions, specifically:
Are you, under a tax treaty with another country, considered resident in the other country and not resident in Canada? NO because of your J status.
Are you subject to income tax in that country on your world income? (total income from inside and outside Canada)? NO because of your J status
will keep you Cdn resident.
Notice they ask these questions BEFORE going through your Cdn and foreign ties.
Because it does not appear that you had any non-sheltered investments before moving, it would not be difficult to amend your tax return if the decision is favourable.
However....
the "Statement of Residency" questions, specifically:
Are you, under a tax treaty with another country, considered resident in the other country and not resident in Canada? NO because of your J status.
Are you subject to income tax in that country on your world income? (total income from inside and outside Canada)? NO because of your J status
will keep you Cdn resident.
Notice they ask these questions BEFORE going through your Cdn and foreign ties.
Because it does not appear that you had any non-sheltered investments before moving, it would not be difficult to amend your tax return if the decision is favourable.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Wow great information, thank you both.
I'm still processing this info, just need to talk it out.
So if it wasn't for my J-1 status I could depart no issue, but we can't for the reasons you explained. So when would be our departure date in the future? I'm guessing it must have to be the day I get a TN or other visa?
So the advantages of 1040NR XXV(2) provision vs. normal 1040 is we get joint tax rates in either case, but for 1040NR XXV(2) we only report US income from September to December instead of income from Canada and the US for the entire year on 1040? Do I understand this correctly?
Yes no non-retirement accounts, so maybe I will do the NR73; sounds like I have nothing to lose.
I'm still processing this info, just need to talk it out.
So if it wasn't for my J-1 status I could depart no issue, but we can't for the reasons you explained. So when would be our departure date in the future? I'm guessing it must have to be the day I get a TN or other visa?
So the advantages of 1040NR XXV(2) provision vs. normal 1040 is we get joint tax rates in either case, but for 1040NR XXV(2) we only report US income from September to December instead of income from Canada and the US for the entire year on 1040? Do I understand this correctly?
Yes no non-retirement accounts, so maybe I will do the NR73; sounds like I have nothing to lose.
It would be the day you cease being J-1/2.
As to XXV(2), I'm more addressing 2016 and going forward., but, yes, for 2015, you already have the option of
a) 1040NR
b) 1040 joint -- full year.
c) 1040NR using XXV(2), which is essentially 1040 joint AND 1040NR. The advantage is that you never get rid of all the tax on your Cdn income using 1040MFJ in the moving year, but it is usually better than 1040NR. Because you are not resident, you get the best of both worlds.
Don't be too aggressive with (b) or (c), since you are still taxable in Canada on your US income. reducing US tax too much merely makes you more liable in Canada. Your goal is simply to reduce it below Cdn rates.
As to XXV(2), I'm more addressing 2016 and going forward., but, yes, for 2015, you already have the option of
a) 1040NR
b) 1040 joint -- full year.
c) 1040NR using XXV(2), which is essentially 1040 joint AND 1040NR. The advantage is that you never get rid of all the tax on your Cdn income using 1040MFJ in the moving year, but it is usually better than 1040NR. Because you are not resident, you get the best of both worlds.
Don't be too aggressive with (b) or (c), since you are still taxable in Canada on your US income. reducing US tax too much merely makes you more liable in Canada. Your goal is simply to reduce it below Cdn rates.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Ok this is a lot more clear to me now. Thanks.
One more thing that occurred to me. As per the advice of my financial advisor I was thinking of doing some investing in the US. I don't think he knows too much about the cross-border issues.
If I purchase a non-retirement account, and/or a Limited Partnership, will these be deemed to be sold when I eventually depart Canada. If so, I might just wait until afterwards to avoid the hassle.
One more thing that occurred to me. As per the advice of my financial advisor I was thinking of doing some investing in the US. I don't think he knows too much about the cross-border issues.
If I purchase a non-retirement account, and/or a Limited Partnership, will these be deemed to be sold when I eventually depart Canada. If so, I might just wait until afterwards to avoid the hassle.