[size=12][size=18]Hi, I'm glad I found your forum. It's very informative. Here's my situation.
I'm a Canadian who has moved to the U.S. (as an H4 under my husband's H1B) in spring 2006 with our infant. My husband had already relocated to the U.S. for his new job in early 2005. I was employed in Canada until mid-2005, when I give birth to our baby, and eventually resigned my job. For the next 12 months, I received Canadian maternity benefits.
My husband has had an SSN for several years and completed 1040 returns (filed single) as he studied and worked in the U.S. for about a decade. For 2006, we are completing our first married filed jointly 1040 (the taxes are considerably less than filing married separate). Following are some facts about my situation:
1. I did not have any U.S. income for 2006, only received Canadian maternity benefits: have T4, T4E and T4A (no income tax was deducted from this amount ... is this relevant for the 1116 form?)
2. I obtained an SSN in late 2006 to be claimed as an exemption on joint 1040.
3. I am completing my 2006 Canadian Tax Return as a final Canadian resident for 2006 -- will be getting a refund.
4. I am presuming that because I received Canadian maternity benefits for part of 2006 while in the U.S., I have to declare this income (around US$16,000) on the joint 1040, and complete (muddle thru') the Foreign Tax Credit 1116. Re #1, if no income was deducted on a tax slip, can I still include it on the 1116?
5. Because I have RRSPs, I will complete the 8891 by Apr.15.07 to elect to defer income taxes.
6. Because of #5 above and because I still have Canadian bank accounts, I will complete a TDF 90-22.1 to the Treasury Dept. by June 30.
7. Even with completing the Foreign Tax Credit, we still have to pay state and federal taxes of about $1,000. The state we live in does not offer a foreign tax credit. I guess $1,000 is a small amount in the big scheme of things, but it's $1,000 more than I'd like to pay. If I had planned my move strategically, I would have stayed in Canada for 2006 a little longer.
Thank you so much for your help. [color=indigo][/color][/size][/size]
Canadian maternity benefits on joint 1040, 1116; 8891 etc.
Moderator: Mark T Serbinski CA CPA
Because (a) you did not tell hrdc that you left Canada and (B) did not have NR tax withheld from your mat benefits, your Cdn tax return will be a little complicated. AS a non-resident, you were supposed to have 25% tax withheld. This income however is treated in a special manner by CRA (it is eligible for section 217 treatment). You will need to read the section in the Emigrants guide (which I hope you have looked at) to see how to file.
as to your foreign tax credit, since you will likely pay very little tax, your foreign tax credit is unlikely to be very much, and your cdn income will likely be taxed quite highly in US, with little relief.
I assume the T$a is severance pay(?)This is also subject to NR tax and 217 treatment, if it was received after you left Canada.
as to your foreign tax credit, since you will likely pay very little tax, your foreign tax credit is unlikely to be very much, and your cdn income will likely be taxed quite highly in US, with little relief.
I assume the T$a is severance pay(?)This is also subject to NR tax and 217 treatment, if it was received after you left Canada.
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
Hi Nelson, during my mat leave, I visited my husband in the US for a few months then returned home to Canada, but moved in after the benefits had ended. I didn't think that posed a problem. Also, I remained a Canadian resident for 2006, because we weren't sure of my husband's permanent job situation, in case I needed to return home. Hence, I maintained my bank accounts, credit cards, etc.
Be careful claiming that you remained resident in canada, 'cause that could easily mean your husband did as well, making him taxable.
In any event, if you didn't officially move to US until after your benefits were paid, why would you need to include them in your STATE return. The state only is entitled to tax from (a) that state or (b) when you are resident there. all states have part-year resident returns on which you could exclude the income you earned before you moved.
For cdn residency bank accounts and credit cards mean nothing. Where your husband is living, and whether or not you owned/rtented a place in canada is what counts.
In any event, if you didn't officially move to US until after your benefits were paid, why would you need to include them in your STATE return. The state only is entitled to tax from (a) that state or (b) when you are resident there. all states have part-year resident returns on which you could exclude the income you earned before you moved.
For cdn residency bank accounts and credit cards mean nothing. Where your husband is living, and whether or not you owned/rtented a place in canada is what counts.
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
Just one other thing: if your husband was filinga 1040 after he was married, he had to file either married filing separtately or married filing jointly, not single.
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
Hi Nelson, to clarify a little more, my husband has been a Canadian non-resident for tax purposes from 2004 onwards. He has confirmed with Rev. Can. about filing his final return and got a letter from them saying he doesn't owe them any taxes. He was happy as he disliked the Cdn. taxation system; I never had a problem with it! I don't like the US taxation system! :)
While he worked in Canada on a work visa, we dated, married and I got pregnant. I wasn't sure of moving to the U.S. (visiting was okay for me) if he didn't get a permanent job, since I was very much established in Canada. I've since sold my home, but maintained only bank accounts and credit cards (oand f course, RRSPs). He eventually got the job, but I'm still cautious. I'm a Canadian-raised gal and just prefer living in Canada over living in the US any day. :)
My question about "state" tax return is that I'm electing to be treated as a US person for tax purposes for 2006, to reduce the US tax burdon on filing jointly vs filing separately. I "assume" that what I enter on the 1040 as foreign income must also be included in the state tax return. I've been holding off calling them to verify ... I haven't had much success with speaking to the state taxation people. I didn't think it was possible to complete a part-year resident state return and a full-year for the 1040. Thanks.
While he worked in Canada on a work visa, we dated, married and I got pregnant. I wasn't sure of moving to the U.S. (visiting was okay for me) if he didn't get a permanent job, since I was very much established in Canada. I've since sold my home, but maintained only bank accounts and credit cards (oand f course, RRSPs). He eventually got the job, but I'm still cautious. I'm a Canadian-raised gal and just prefer living in Canada over living in the US any day. :)
My question about "state" tax return is that I'm electing to be treated as a US person for tax purposes for 2006, to reduce the US tax burdon on filing jointly vs filing separately. I "assume" that what I enter on the 1040 as foreign income must also be included in the state tax return. I've been holding off calling them to verify ... I haven't had much success with speaking to the state taxation people. I didn't think it was possible to complete a part-year resident state return and a full-year for the 1040. Thanks.
As i said, the state you live in is only entitled to tax income you receive from that state, or income you receive while living in the state. This would be the same as if you moved from one state to the other: just because something appears on your 1040, does not mean the state gets it too.
If you move from new jersey to vermont, you file part-year returns in both states. Same in this case, except that your other 'state' is in canada.
You need to establish a move date and stick with it: When did you break residential ties in canada: to me it seems a lot earlier than you seem to think. The day you sold your house for example. You can't really 'pick' a date when you left. it is a matter of fact.
One other question: did your husband marry you before he became non-resident , and if so, on his NR73 that he sent, did he state that you would remain in canada? If the answer is NO to either of these questions, then CRA is quite entitled to re-evaluate his residency, based on your continuing to live in Canada for some time.
If you move from new jersey to vermont, you file part-year returns in both states. Same in this case, except that your other 'state' is in canada.
You need to establish a move date and stick with it: When did you break residential ties in canada: to me it seems a lot earlier than you seem to think. The day you sold your house for example. You can't really 'pick' a date when you left. it is a matter of fact.
One other question: did your husband marry you before he became non-resident , and if so, on his NR73 that he sent, did he state that you would remain in canada? If the answer is NO to either of these questions, then CRA is quite entitled to re-evaluate his residency, based on your continuing to live in Canada for some time.
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
My husband married me before becoming a non-resident.
Now, I have off-topic issue I have to deal with. I just discovered there's a chance of identify theft on my SSN. I tried to open a bank account online today, and the site asked me questions of accounts that were clearly not mine, so I contacted the bank who referred me to the credit bureau's website. I was shocked to discover the same information on their website. I called SSN to ensure I was given a unique number; they then referred me to their fraud hotline. Sigh! I've only had this SSN for a few months, and look what has happened! Gee ... is that an endorsement for me to return to Canada??? :) I have to sort this mess out soon.
Thanks for all your other help, Nelson
Now, I have off-topic issue I have to deal with. I just discovered there's a chance of identify theft on my SSN. I tried to open a bank account online today, and the site asked me questions of accounts that were clearly not mine, so I contacted the bank who referred me to the credit bureau's website. I was shocked to discover the same information on their website. I called SSN to ensure I was given a unique number; they then referred me to their fraud hotline. Sigh! I've only had this SSN for a few months, and look what has happened! Gee ... is that an endorsement for me to return to Canada??? :) I have to sort this mess out soon.
Thanks for all your other help, Nelson