Canadian working in US on TN

beely · Post by **beely** » Mon Feb 14, 2011 1:23 am

I think this topic has been brought up a number of times and I have read as much as I could absorb before starting a new thread. I thank you in advanced for any help given. (I have no experience in filing tax)

I have a number of questions but first thing first, here is my situation.

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I moved to Cali for a 1 year contract as an intern since September of 2010.
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My questions are (2010 tax-specific):

1) Do I just file the 1040 NR reporting my US income for US tax?
2) Can I file the 1040 NR EZ instead because my case is relatively simple?
3) Can I file 3903 for moving expenses?
4) On the Canadian side, I will file as it is done regularly but with world income (the amount on W-2)
5) The rents I pay now, can that amount be used anywhere in the process?

Did I miss anything?

Fast forward, if I do switch to full time or get extended:
6) How is my residency be determined? The time I cut ties with Canada (close bank account, cancel driver license) or January of 2011 since by then I would have resided in US for more than 180 days?
7) Can I actually have Canada as my tax home in 2011?
8) Do I have to transfer my unregistered investment account to a US broker and I assume that would be deemed disposition?
9) Is it advised to sell everything in TFSA? How does the foreign trust fund thing work?

Other questions:
10) Can I contribute to Roth IRA for 2010? I actually have no clue on how this work as in my allowable contribution. It is based on my 2010 income?
11) If in the future I buy a house in Canada as a rental, am I still considered as residence of US and how is this rental income be taxed.

These are all potential scenario; hence I am asking questions about them so I can be prepared for it.

Thank You so much.

beely · Post by **beely** » Mon Feb 14, 2011 2:43 am

In addition to the set of questions listed above

I also would like to know:

12) how to calculate the tax refund as I expect to get some back since I have only been working in the US for a few month.

The reason I am asking is that would reduce the actual amount of taxes paid and for Canadian tax purposes (form T2209), the net amt of taxes paid is required.

nelsona · Post by **nelsona** » Mon Feb 14, 2011 7:04 am

12 questions!? Absorb a little more first.

You became US resident the day you moved to US on TN. work from that starting point.

beely · Post by **beely** » Mon Feb 14, 2011 12:00 pm

[quote="nelsona"]12 questions!? Absorb a little more first.

You became US resident the day you moved to US on TN. work from that starting point.[/quote]

I know I still have a lot of reading to do.

Wouldn't I be considered as a NR because I didn't meet the Substantial Presence Test in 2010? I have only been in the US for about 120 days?

nelsona · Post by **nelsona** » Mon Feb 14, 2011 12:05 pm

Unlike Cdn taxes, US non-residents are DISfavoured when reporting o na 1040NR, so you are wnating to be trreated liek a US resident.

You *can* file a 1040NR for 2010 (becareful that your residency date starts the first day you were in US at any time in the year, even on vacation), but you will not save any US tax doing so.

The typical way -- as you have no doubt read -- is to file full year 10440, using 2555 for your pre-arrival Cdn wages and forms 1116 for tax credit other Cdn income.
This will both give lowest US taxrate and proof that you are a US tax resident.

nelsona · Post by **nelsona** » Mon Feb 14, 2011 12:06 pm

Also, filing in this manner allows you to use off-the-shelf tax software, while 1040NR does not.

beely · Post by **beely** » Mon Feb 14, 2011 1:39 pm

One last question before I go back and read more.

What are the tax implications if I go back to Canada after this 1 year contract. I guess the question is should this be of consideration when filing my 2010 taxes?

This would mean i am a resident of:
-Canada from jan 2010 to Aug 2010
-US from Sept 2010 to Aug 2011
-Canada from 2011 and onward

nelsona · Post by **nelsona** » Mon Feb 14, 2011 1:49 pm

For Cdn tax purposes you will be non-resident from Sept 2010, until Aug 2011. You will have left canada, and then returned.

For US, how you file is not so much a reflection of residency, so you will file 2010 and 2011 returns in the manner which yeilds lowest tax. At a minimum you will be resident from jan 01, 2011 until the day youy return to Canada. But. as I outlined above, you will probably choose to file a full 1040 for both years.

animalchin · Post by **animalchin** » Fri Feb 18, 2011 12:24 pm

To clarify, by filing a full-year 1040, does that mean not putting dual-status alien at the top of the return, and reporting my full year world income on the US return? Would that entitle me to the standard deduction that dual-status returns don't get?

Then should I file my Canadian return as an emmigrant return, reporting only world income up until my departure date and Canadian source income for the rest?

nelsona · Post by **nelsona** » Fri Feb 18, 2011 12:28 pm

By filing full year, you get all and any of the normal parts of the 1040, but you do have to report all world income, and can use 2555 or 1116 towards your Cdn income.

Hpw you file in US has no bearing on your Cdn departure return. If you left Canada to live and work in US, you are an emigrant.

animalchin · Post by **animalchin** » Fri Feb 18, 2011 12:54 pm

In order to file full year 1040 do I need to meet the substantial presence test? Or is it sufficient to be residing/working in the US in the latter part of the year (which makes me a resident alien under the treaty as I understand it and requires me to at least file a dual-status 1040).

nelsona · Post by **nelsona** » Fri Feb 18, 2011 12:58 pm

If you don't meet SPT, you don;t have to file 1040 at all, you could file 1040NR, this and other options are your choice.
If you meet SPT you must at least file dual, but can elect file full.

beely · Post by **beely** » Sat Feb 19, 2011 7:14 pm

If you are in the same situation as me then you have 3 options (I believe)

1) File as non-resident, using 1040NR.
2) File as dual-resident, (part-1040NR, part-1040).
3) by treaty, you can file a full year 1040

As nelsona pointed out that most of the time it is more beneficial to file a full 1040
I am going to give my an assignment to try all three options to help myself understand the process as well as seeing what's best for me. Since I didn't make a whole lot when I was in Canada (was still in school).

Nelsona, i do have two questions. By treaty, I should be able to use the tuition credits i have accumulated but how is this done? Do I have to file a 1040 to get that deduction?

For cnd taxes, I will file as a non-resident? or a resident of my province?

beely · Post by **beely** » Sun Feb 20, 2011 4:16 am

After reading Publication 970, I am not even sure if I can claim any tuition tax credit as the last payment was made in 2009 and Canadian university, I guess would not meet this statement "postsecondary educational institution eligible to participate in a student aid program administered by the U.S.".

I guess I can still carry forward it indefinitely.

Can I get some advice on best to utilize them?

Also, if I file a 1040 how do I report dividend earned? Do I report it on 1040 or on form 1116? I suspect the latter.

nelsona · Post by **nelsona** » Fri Feb 25, 2011 11:17 am

Cdn universities ALL qualify for US student aid.