My spouse and I moved from Canada to California in October 2024 - we have not left since arriving. We will meet the SPT in the US in 2025. My current strategy is:
1. Use the first-year choice to be considered US residents at year-end.
2. File a MFJ full-year 1040 by using 6013.
3. File a part-year return in Canada from Jan-Oct.
4. Use the tax payed in Canada as a foreign tax credit.
Some important info:
1. My spouse is a low-income earner, so MFJ is preferential.
2. My income is entirely from a US company. I've been a contractor with them for the entirety of 2024. I've signed a W8-BEN, so no tax was withheld.
3. We own a property in Canada that was rented from Nov 2024. I'm remitting 25% each month.
4. We have RRSPs, but no other investments.
5. RRSPs aren't recognized in California, so I'll include dividends and other income on my CA return.
6. I have a CPA in Canada I've been using for years. I'm planning to either consult a firm specializing in cross-border strategy or hire a US accountant and manage the cross-border strategy myself.
Questions:
1. Is that strategy sound? Is there anything I'm missing?
2. I understand that California doesn't honour the US/Canada treaty - does that mean I can't use the credit towards my state taxes?
First-year choice & filing jointly under 6013?
Moderator: Mark T Serbinski CA CPA