Tax Residency Status and Dates

nquery · Post by **nquery** » Tue Aug 21, 2012 7:29 pm

Hi,

I entered the US on July 20 with a spousal IR-1 visa, activating my permanent residency as of that date. My family (spouse and child, both US citizens) has a lease agreement in place with with some friends in the US as a base/home to use until we find our own place.

Like many others, we have returned to Canada to tie up loose ends, finish our house hunt stateside, end our lease here, etc. My employer has both Cdn and US arms and have agreed to let me relocate to the US arm and work from remotely from there. While we have spent almost 40% of the time stateside so far since July 20, I continue to work 80% of the time from the Canadian office. Once we have a new house lined up stateside, I will move to the US payroll. I am also in the process of buying a US vehicle and selling my CDN vehicle.

Questions:
1. According to the tax treaty I think that tie-breaker rules would say that I am a CDN resident for tax purposes although it seems somewhat grey. I technically have permanent abodes in both countries but my center of economic interest is still in Canada, at least until I move my job to the US arm. What do you think?

2. I will file a CDN departure return next April of course. I am assuming that my date of departure will be the day I start working from the US arm or end my lease in canada, whichever comes first? I doubt they care about the date I entered the US as a PR. (yes I am aware of closing non-registered accounts and such for deemed non-residency).

3. Likewise, I will file a full year 1040 for 2012. I know that the US sees me as a resident from the date I entered as a PR but not sure when the FEIE and any other foreign credits would be applicable until - until the date I entered as a PR or the date that I switched from the Cdn arm to the US arm or date that I only had an abode in the US?

I know that these two dates might not necessarily be the same as each country sees things differently ... so soliciting your wise input!

Thanks!

nelsona · Post by **nelsona** » Tue Aug 21, 2012 9:38 pm

1. Because you are a GC holder, you must file a 1040 reporting world income, so it doesn't relly matter that you are still in canada for that purpose. You will file in both countries until you leave canada.

2. Correct

3. Correct. You can use FEIE and/or FTC just like any other US taxpayer living in Canada, and file full year 1040, regardless of what you do for Cdn taxes.

nquery · Post by **nquery** » Tue Aug 21, 2012 9:47 pm

Thanks for your confirmation of my questions. With respect to using the FEIE and/or FTC, am I correct that I would be able to apply those up to the date of departure as specified on my cdn return (lets say oct 1 for example) and not just up to the date I became a PR on July 20?

nelsona · Post by **nelsona** » Tue Aug 21, 2012 9:55 pm

You can use FEIE as long as you qualify for the physical presence test (which means not spending mre than 30 days in US in any 365-day period).

You can use FTC anytime, all that is required is that you have foreign-source income and/or foreign tax.

nquery · Post by **nquery** » Wed Aug 22, 2012 12:05 am

Ok right. Thanks.