"Partial Year 217"

[CeriseRose]

I am a Canadian citizen who moved from BC to the US to be married in July 2005. My income was from 100% Canadian sources in 2005. After speaking with the International tax office of Revenue Canada, I'm clear on how I have to file my taxes. They also told me that, as I withdrew an RRSP in December 2005, I had the option of requesting a "partial year 217" when I file my 2005 taxes to try to recoup some of the 25% non-resident tax taken on that. I was told to file my BC tax forms and then attach a letter to them that stated 1) my 2005 income was from at least 90% Canadian source and 2) that I was requesting my RRSP withdrawal after leaving Canada to be considered under a partial year 217.

So, just for fun , I have completed my taxes and then did a few very basic calculations on a non-resident set of forms to see what the difference would be. The only thing of which I'm unsure is, on these non-resident forms it used my husband's world income in determining some of the credits. My questions are:

1) On a partial year 217 would they still consider my husband's world income? Would it be somehow prorated? If they do consider that income, how do they verify what I say is correct (i.e. do I need to send a copy of our jointly-filed US taxes or W2 or ???)?

2) If I choose to request them to review it for partial year 217, I'm assuming that I would send my NR4 to them for that purpose. Is that correct?


My apologies if this has been asked already...if so, please point me to the link! Thanks!!!

[nelsona]

Your husbands income would be used to get a spousal credit. The simple thing to do (what I do) is not list any spousal income, but take no credit for it either.

Your 217 return will not get you back much of your 25%, since you worked during the year. You will have fed nor-res surtax to pay which will bump you back up to the 23% tax braket or so, so you may get some back. Your return will look like any other normal Cdn resident return, except that you will pay BC tax on the first part of the year and non-res surtax on your RRSP withdrawal. Do not forget the non-res surtax (I think I've made that clear)

If you were not going to work in 2006, I would have suggested that you wait until 20006 to make this withdrawal, but that is past now.

[CeriseRose]

Thanks for such a quick response!

I suspected as much about the non-res surtax...I'd seen it on the form and figured it out with that factored in addition.

We're actually in better shape with the RRSP withdrawal last year...between us we only worked 6 months total last year, living off of savings the rest of the time, so it's a low income-low tax year for us, with refunds on both sides of the border. This year (2006), we're both working full time so we'd have gotten dinged for it for sure (been there, done that, learned the hard way what NOT to do to save on taxes. )

The end result I computed was only a difference of $200 in refund and I wasn't sure if it was worth all the extra rigamarole. Your comments go toward verifying (at least in my mind) that it's not really.

Thanks again!!!