Dual Canada-US Tax Residency Situation

[Maggie Z]

Hello everyone,

I’m looking for advice from experienced professionals or anyone familiar with tax residency issues.

My husband has been working in Maryland, USA, since June 2023 and has stayed there for 194 days, making him a U.S. tax resident under the substantial presence test. However, my child and I have been living in Ottawa, Canada, the entire time. We purchased a townhouse in Canada in July 2024, and my husband still has multiple Canadian bank accounts and GICs. Based on these ties, he seems to still be considered a Canadian tax resident as well.

I am starting full-time college in September 2024 and have no income. We are now struggling with tax filing because several accountants we consulted were unsure how to handle our case.

Should we file taxes in Canada first or in the U.S.?
Can my husband file U.S. taxes under a family-based status?
In Canada, my husband’s U.S. income is considered foreign income. Similarly, would his Canadian GIC earnings be considered foreign income in the U.S.?
We are overwhelmed and worried about potential tax complications in the future. If any experienced accountants or knowledgeable individuals can provide guidance or contact me for further discussion, we would greatly appreciate it.

Thank you in advance!

[nelsona]

Since he is not staying full-time in US (given the low number of days per year), while he can choose to file a US tax return as a resident if it results in lower taxes than a non-resident, it will not definitely NOT him a Cdn non-resident.

He must avoid frequent regular visits to Canada.

So,. as of now, he still needs to report ALL world income in canada, and should he decide to fila 1040, report all world income for BOTH of you (on a joint 1040). He would then get credit for US taxes owed for his wages, on his Cdn return. The Cdn tax on his GICs, woyuld be used against the US tax on the GICs.

The order of filing doesn;t matter. One prepares both taxes at teh same time without foreign tax credits, and uses those figures to get the foreign tax credits.

Complicated, but any cross-bordr CPA can do this -- expensively.

The simplest would be for your husband to stop visiting you (which may not be appealing, but....)

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