GC holder, Dual residency, Canadian only income

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rybshik
Posts: 4
Joined: Wed Jul 27, 2011 9:22 am

GC holder, Dual residency, Canadian only income

Post by rybshik »

Hello,
I am a Canadian citizen, got my US GC in July 2010. Physically present most of time in the US. Employed by a Canadian firm located in Ontario , paying my Canadian taxes as a regular Ontario resident. I am ok with paying my Canadian taxes and NOT seeking to end my Canadian residency (for CRA tax purposes). So I want to continue being a Canadian resident for CRA and a US resident for IRS. I believe it is possible, correct me if I am wrong.

I do not have any US income.

As I understand, because of US-Canada tax treaties, I most likely owing nothing to IRS. If this is indeed the case (i.e. my US tax liability is zero) do I really have to file my US taxes at all? Especially, given that I have no US income.

If I am to file my US taxes, which on-line tax software is easier to use for my case? Basically, I want to input my Canadian AGI, my Canadian tax paid to CRA, and my US state of residence. I would file as single.

Thanks!
nelsona
Posts: 18680
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Wll, you cannot have it both ways if you live in US. In fact, what you are asking is the complete OPPOSITE of your situation.

US:

US doesn't have residency requirements for taxation: GC holders simply MUST report world income to IRS. Period. So, even if you were living in canada, you would have to file with IRS.

But since you also live in US, you have no choice as to fileing a US tax return.

And , unlike Cdn taxation, where you only need to file under certain circumstances, unless you owe tax, for IRS, once you make over $10K you MUST report your income, and then take all the deductions, credits, exemptions etc to determine your tax. Until you file, you cannot claim to owe no taxes.

As a US taxpayer with foreign holdings, there are several requirements to report foreign accounts, including existence of RRSP (there are many threads on this) . You will be filing a 1040 with schedules, forms 1116 for foreign tax credit

Turbotax online handles these. if you are married you must file married, not single. you can file separately from your spouse, but you cannot file as single.

Canada:
canada agreesively takes the position that once you live in another treaty country, canada pushes you out of Canada for tax purposes, calling you a deemed non-resident, regardless of how many ties you have in canada. You are a US tax resident, thus will be considered a Cdn non-resident at some point, so you should treat yourself like that now.

File a departure return for 2010, deemed disposition, etc. Your Cdn wages will be taxed pretty much as they are now. You will file 2011 as a non-resident, reporting only Cdn-sourced income.

Truly, Only Cdn residents can file full returns in both countries. There is rarely an advantage for a Cdn non-resident to file as a resident, because non-resident taxation is usually favourable.

Is there some situation that leads you to think that you need to pretend to be Cdn resident? maybe I can alleviate your misconception.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
rybshik
Posts: 4
Joined: Wed Jul 27, 2011 9:22 am

Post by rybshik »

nelsona, thanks for your reply!

[quote="nelsona"] Turbotax online handles these [/quote] Turbotax online is not working now, at least for me.

[quote="nelsona"] As a US taxpayer with foreign holdings, there are several requirements to report foreign accounts, including existence of RRSP (there are many threads on this) . You will be filing a 1040 with schedules, forms 1116 for foreign tax credit [/quote] In which cases one has to "report foreign accounts" to IRS? Do I have to report my Canadian checking and savings accounts? My total RRSP is very minor, less than $50,000. Do I have to report it?
rybshik
Posts: 4
Joined: Wed Jul 27, 2011 9:22 am

Post by rybshik »

[quote="nelsona"] You will be filing a 1040 with schedules, forms 1116 [/quote]
Is it only schedule-form 1116? Do I input both my Canadian AGI and my Canadian tax paid to CRA in form 1116? Thanks
nelsona
Posts: 18680
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You'll have to follow the various requirements of 1116. You have to report certain income on separate 1116's.

You will also have 8891 and FBAR form requirements.

face it. You will be filing a FULL 1040, just like any other US taxpayer, as well as other things related to your Cdn income.

As to why US turbotax (not Cdn) isn't working, ask them.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
rybshik
Posts: 4
Joined: Wed Jul 27, 2011 9:22 am

Post by rybshik »

[quote="nelsona"]You'll have to follow the various requirements of 1116. You have to report certain income on separate 1116's.[/quote]

Nelsona,
My only income is my Canadian salary (paid monthly), I receive T4 from my Canadian employer. For the employer, I am sort of a full-time employee working remotely, from home (presumably Canadian home). My only tax (already paid to CRA) is on that salary. Can you please advice how I fill forms 1116, 8891, and FBAR? What options do I choose? Should I read trough a lot of IRS documents in order to be able fill out the forms? I was thinking that I would put my AGI figure from T4, the figure of my Canadian taxes paid and that would be it. Is it more complicated than that? Given that I have ho investments (other than a few K of RRSP on savings account). I also own a house in Canada and am paying my mortgage. Does it affect my US return? Should I report it to IRS?
nelsona
Posts: 18680
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

So, you have interest, RRSP, TFSA?

I don't do the mechanics of tax returns. You need to report wages on the line for wages, interst on schedule B, etc. Turbo tax will walk you thru it.

You moved to US. Get with their system!
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
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