Ignorant Canadian in US dealing with tax issues

[Don K]

I’m Canadian and my wife is a Canadian Perm resident. Wife moved to the US in July 2010 on a J1 Visa for a post graduate residency where she is paid. I joined in Dec 2011 on a J2 Visa which I’m using to work in the USA. No property in Canada, just a bank accont , credit cards and a LIRA from old job. Wife will complete training in 2016 and we have plans on returning then to Canada. We ignorantly used a Canadian address in 2012 to file 2011 taxes for myself and my wife. Wife deemed herself a Canadian resident and declared her US income. She initially paid about $800 in taxes. Her taxes was however reassessed in Oct 2012 and given a far larger bill ($2500).

Questions:
1. What will be the best way to file taxes while living in the USA based on our J1-visa status?
2. Should we file a NR 73 form, pay a departure tax and then refile her 2011 taxes based on if she is given a non-resident determination?
3. Close all credit cards and fold up my LIRA to meet non-resident requirements (Would like to keep the cards so I don’t have to re-establish credit from scratch when we move back)

Any thoughts and recommendations will be appreciated as this is very confusing and new to us.

[nelsona]

While on J status in US, you are not considered US residents, so you remain Cdn residents all along.

Even if you could become non-resident, having credit cards and LIRA id not a residentrial tie that you would need to break.

The problem is that your US status does not allopw you to break Cdn tax residency.

You should both file as residents (not deemed residents), of the province you lived in.