Hello,
I moved to Canada after working in the US. I thought I had the details worked out but researching more I see I didn't. And I got a little curve ball since anyway.
Background: I am Canadian. I worked in the US for 12 years, about 1/2 TN and 1/2 H1-B (with no green card pursuit). I returned to Canada last fall. I did not work in Canada at all last year. My spouse is Japanese (PR in Canada before and after living in the US; was TD in the US so never worked).
Because I was in the US more than 8 years, I thought I was supposed to submit form 8854 with my US taxes this year. But, researching more I see I was a legal resident but not a legal *permanent* resident so I don't have to file 8854. I also read here that I don't have to file 1040-C either being a Canadian (due to Canadians not having any more burden on them than US citizens). I read that the country you move to also determines if you are exempt from 1040-C. If I understand correctly, because of this, despite my spouse being Japanese, there's still no need to file 1040-C.
Here's what I thought I thought I should do:
- File a full year 1040 (joint) for TY 2012 and file Canadian taxes for the 3 months in Canada. The Canadian return will be basically zeros. The next year, file a 1040NR with mostly zeros as I have no US-source income except for a bank account that's open. (I'll probably close it once the taxes are processed).
The curve ball I got is that I waited til I received all pay before leaving the US but the company found more and just sent me a check with income from some escrow related to a buyout (dated 2013). It's about 7,000 after taxes but I'll still be getting a W2 for TY 2013. :(
I'd already prepared my 1040 as above. I think this is still ok (?) But I wonder if I have to do a dual status 1040 for 2013 and then a final 1040NR in 2014 to let the IRS know I'm gone. Or should I change this year's 1040 before filing it too?
I would greatly appreciate it if anyone points out errors in my thinking here.
Kind regards.
Final US return when receiving income after departure
Moderator: Mark T Serbinski CA CPA
for US, you repoted everything form 2012, and that is correct. For canada, you file a newcomer return, with an arrival date, and only 2012 income recieved after that date -- including any US interst. I would file even if it was a zero=tax return, to estatblish my return date. Remember to track your investment values the day you left so you can pay correct tax when you sell these.
For 2013 you will file a 1040NR (and state return if applicable), not to report interest, since NR's don't pay US tax on interest, but to report your w-2. The good nees is the treaty exempts $10K of wages for Cdn red=sidents, so you will get all tax back.
You will include this on your Cdn return and pay Cdn tax, using any fica and state tax as a credit. You would have had to include this on your Cdbn return for 2012 had you gotten it anytime after you left US.
For 2013 you will file a 1040NR (and state return if applicable), not to report interest, since NR's don't pay US tax on interest, but to report your w-2. The good nees is the treaty exempts $10K of wages for Cdn red=sidents, so you will get all tax back.
You will include this on your Cdn return and pay Cdn tax, using any fica and state tax as a credit. You would have had to include this on your Cdbn return for 2012 had you gotten it anytime after you left US.
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
Thank you nelsona. This is very helpful.
I looked up Article XV. It looks like this $10,000 means before tax. I quoted after tax. Before tax is about $14,000. It looks like I don't get the exemption. The article also says "the recipient *is present* in the other Contracting State for ... no more than 183 days". Does that mean I would have to be go stay in the US for 1 night for this exemption to apply (or is 0 days ok)?
It looks like I'll have to take a foreign tax credit in Canada next year. One site said I may not get the full credit ( :( ). I do have about $2800 of US capital gains loss leftover. Would I be able to use that in this case? (I understand that I can't use it in Canada).
If I report US interest while in Canada on the Canadian return, do I take a pro-rated foreign tax credit for that on the Canadian return too or do I just swallow it?
Thank you for the reminder about getting my stock values when I entered Canada.
Was I correct that I don't need to submit a 1040-C or 8854?
I looked up Article XV. It looks like this $10,000 means before tax. I quoted after tax. Before tax is about $14,000. It looks like I don't get the exemption. The article also says "the recipient *is present* in the other Contracting State for ... no more than 183 days". Does that mean I would have to be go stay in the US for 1 night for this exemption to apply (or is 0 days ok)?
It looks like I'll have to take a foreign tax credit in Canada next year. One site said I may not get the full credit ( :( ). I do have about $2800 of US capital gains loss leftover. Would I be able to use that in this case? (I understand that I can't use it in Canada).
If I report US interest while in Canada on the Canadian return, do I take a pro-rated foreign tax credit for that on the Canadian return too or do I just swallow it?
Thank you for the reminder about getting my stock values when I entered Canada.
Was I correct that I don't need to submit a 1040-C or 8854?
Well, you don;t get the exemption, but it means less than 183 days. 0 is less than 183 days, right?
Too many questions about next years return, sorry.
Too many questions about next years return, sorry.
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
FYI, if anyone finds this thread because they're searching for how Canadians can let the IRS know they're gone (ie 8854 or 1040-C), I think I've got it.
Given my questions, nelsona just recommended a 1040NR. That and other comments like
> I think is is a good practice to submit a 1040NR in the year following departure. Remember, Cdns don't have to file a 1040-C 'Sailing permit', which would be the best (though laborious) way to indcate departure from US. 1040NR the following year fits nicely. (nelsona, 2006)
mske it sound like a 1040NR is the way to go (if you don't have US citizenship or permanent resident/green card status).
Given my questions, nelsona just recommended a 1040NR. That and other comments like
> I think is is a good practice to submit a 1040NR in the year following departure. Remember, Cdns don't have to file a 1040-C 'Sailing permit', which would be the best (though laborious) way to indcate departure from US. 1040NR the following year fits nicely. (nelsona, 2006)
mske it sound like a 1040NR is the way to go (if you don't have US citizenship or permanent resident/green card status).