The situation: My wife is a long time Canadian resident and citizen who renounced her US citizenship in Sept. 2013. We intend to file her last return (a full year 1040 plus 8854) in June. However, after reviewing all the previous posts on this subject, I am confused as to whether she needs to file form 8833 to justify using a full year 1040.
In one post (Taxpoor, April 4, 2013), Nelsona states that you need to file form 8833, invoking Article XXV(1) of the Canada - US Tax Treaty to file a full year 1040 for a renunciation year rather than a dual status 1040NR.
In another post (Riven, May 2, 2013) Nelsona seems to indicate that this is not a treaty issue, and anyone has the right to file a full year 1040 in their last year of US residency. This, despite the fact that in Pub. 519, page 33, it states that if you are a "nonresident at end of year, you must file form 1040NR or 1040NR-EZ."
Which is true? Should we file an 8833 just to be sure?
Full year 1040 and 8833
Moderator: Mark T Serbinski CA CPA
The right to file full year in your departure year is an IRS right, so no 8833 is required.
If you look on page 7 of 519, under last year of residency, it clearly states that if you were resident in 2013 (you were) and are not in 2014 (you are not), your resident termination date is the December 31 2013, which means you are full-year resident: 1040. You are not non-resident until january 1, 2014.
You can choose an earlier date if you qualify (like your expat date) but you are not required to.
as to my previous posts, I told taxpoor no 8833 was needed in this thread:
http://forums.serbinski.com/viewtopic.p ... ght=#30302
I was not able to find the two threads you mentionned, if you could point those out, I can either elaborate or correct...
If you look on page 7 of 519, under last year of residency, it clearly states that if you were resident in 2013 (you were) and are not in 2014 (you are not), your resident termination date is the December 31 2013, which means you are full-year resident: 1040. You are not non-resident until january 1, 2014.
You can choose an earlier date if you qualify (like your expat date) but you are not required to.
as to my previous posts, I told taxpoor no 8833 was needed in this thread:
http://forums.serbinski.com/viewtopic.p ... ght=#30302
I was not able to find the two threads you mentionned, if you could point those out, I can either elaborate or correct...
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
Thanks, Nelsona, I would rather not file 8833 if we don't have to. Just to be clear, even though my wife was not physically present in the US in 2013, since she was subject to US taxation as a US citizen, then whe was a US "resident" for tax purposes. i.e. taxation = residency. Is that right?
Perhaps I misunderstood, but this was the exchange with Taxpoor that I was referring to:
Taxpoor: "This is a very good question ....and let me ask this from a different perspective,,,
I relinquished (not renoucnced) my US citizenship on Dec 12th. So for this tax filing I would RATHER file only one 1040 as opposed to filing both the 1040 and 1040NR.
BUT...if i file a 1040 for the entire year...especially including the days leading to December 31st that I was no longer a US citizen...could the state department throw this back in my face and deny my CLN because I was filing an income tax return (straight 1040) after I had relinquished my citizenship...and in doing so are now acting like a citizen again?"
Nelsona: "No, because you are then using the traty as a Cdn resident, who is always allowed to file a 1040. You would merely attach an 8833 explining use of atriccle xxv(1)"
Taxpoor: "So basically not using form 1040NR forces me into another form 8833?"
Is this form mandatory if one decides (in my case) to just file a 1040 for the entire year?
Nelsona: "You asked if you have the right to file 1040. You do, by treaty, 8833 takes 2 minutes."
Perhaps I misunderstood, but this was the exchange with Taxpoor that I was referring to:
Taxpoor: "This is a very good question ....and let me ask this from a different perspective,,,
I relinquished (not renoucnced) my US citizenship on Dec 12th. So for this tax filing I would RATHER file only one 1040 as opposed to filing both the 1040 and 1040NR.
BUT...if i file a 1040 for the entire year...especially including the days leading to December 31st that I was no longer a US citizen...could the state department throw this back in my face and deny my CLN because I was filing an income tax return (straight 1040) after I had relinquished my citizenship...and in doing so are now acting like a citizen again?"
Nelsona: "No, because you are then using the traty as a Cdn resident, who is always allowed to file a 1040. You would merely attach an 8833 explining use of atriccle xxv(1)"
Taxpoor: "So basically not using form 1040NR forces me into another form 8833?"
Is this form mandatory if one decides (in my case) to just file a 1040 for the entire year?
Nelsona: "You asked if you have the right to file 1040. You do, by treaty, 8833 takes 2 minutes."
I think you will notice later in that thread that I said that I later said "First, you would be allowed to file a full year return because you lived in US the previous year, not because you are a Cdn citizen, everyone has this right in the year they live. it is not a treaty issue, so no 8833 is filed."
I think taxpoor was more referring to the possibility that US might think that filing full year 1040 was somehow using a benefit reserved for US citizens. My point about the treaty was that the treaty gives Cdns the right to file 1040 anytime, so even when giving up US citizenship, this right is not lost for Cdns -- even if it was lost to those who give up citizenship (which it is not).
But, in general, anyone leving US is permitted, in fact forced, to file full year 1040 unless they can show that hey have established a foreign tax home at some point during that year.
I think taxpoor was more referring to the possibility that US might think that filing full year 1040 was somehow using a benefit reserved for US citizens. My point about the treaty was that the treaty gives Cdns the right to file 1040 anytime, so even when giving up US citizenship, this right is not lost for Cdns -- even if it was lost to those who give up citizenship (which it is not).
But, in general, anyone leving US is permitted, in fact forced, to file full year 1040 unless they can show that hey have established a foreign tax home at some point during that year.
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
Thanks, I see that now. However, isn't there a contradiction in Pub. 519 between what it says on page 8 (if you leave US taxation residency in 2013, your default last day of residency is Dec. 31, 2013, i.e. you file a full year 1040), and what is says on page 33 ("You must file Form 1040NR or Form 1040NR-EZ if you are a dual-status taxpayer who gives up residence in the United States during the year and who is not a U.S. resident on the last day of the tax year") ?
Not contradictory at all.
In your last year of residence you are not dual-status unless you establish tax home elsewhere. IRS considers you resident until dec 31,
That's why the sentence you quoted says AND. Both clauses need to be satisfied.
In your last year of residence you are not dual-status unless you establish tax home elsewhere. IRS considers you resident until dec 31,
That's why the sentence you quoted says AND. Both clauses need to be satisfied.
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
Every year my wife (and others in our situation) files a 2555 with her 1040. Line 9 says "List your tax home(s) during your tax year and the date(s) establlished". We have always listed Canada as her tax home, established in 1987 when she moved here, so the 2nd clause is always satisfied.
On futher reflection, I think I answered my own question. One must CHOOSE to be a dual status taxpayer by CHOOSING a residency termination date earlier than Dec. 31, 2013. Once you have made that choice, or course the correct procedure is to file a 1040NR. If you do not make that choice, the default position is still a termination date of Dec.31, and a full year 1040. Contradiction resolved.
On futher reflection, I think I answered my own question. One must CHOOSE to be a dual status taxpayer by CHOOSING a residency termination date earlier than Dec. 31, 2013. Once you have made that choice, or course the correct procedure is to file a 1040NR. If you do not make that choice, the default position is still a termination date of Dec.31, and a full year 1040. Contradiction resolved.