Part year resident Tax in Canada and US - When to move to US

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chicagobuy
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Joined: Wed Jan 20, 2016 8:03 pm
Location: Canada

Part year resident Tax in Canada and US - When to move to US

Post by chicagobuy » Wed Mar 09, 2016 1:47 am

Hello everyone!

I have a question about the tax both in Canada and US.

I will be moving from Canada to US in around June 2016 for a 3-yr term. I will cut all the residential ties from Canada (close all the accounts, no house, spouse or property in Canada except an RRSP).

My question is does it matter if I move in May or July to US?

1. Lets say I move in May. My guess is I will be considered a part year resident in Canada for the first 5 months and CRA will tax me on my Canadian income and IRS will tax me on my US income. Is my assumption correct?

2. If I move to US in July. Will CRA tax me as a full year resident in Canada? I am worried about this since there is a rule about being cosidered a resident of US you need to have a presence of 183 days or more in a year. Since my presence will be less than 183 days so I will be considered a non resident of US. Because of this I will be full year resident of Canada. Is this correct?


Thanks for your help.

Cheers!

nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona » Wed Mar 09, 2016 12:31 pm

Whenever you leave this will be your departure date for Cdn tax and exit tax purposes. Doesn't matter when during the year. day count doesn;'t matter in Canada.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

agrisiva
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Post by agrisiva » Thu Mar 10, 2016 7:50 pm

Thanks Nelsona for your clarification from CRA point of view. But, how about from IRS side. What do I file? 1040 or 1040 NR or Dual-status Alien? What would be the simplest way to do that? I heard Dual-status is very complicated!

nelsona
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Post by nelsona » Fri Mar 11, 2016 6:32 am

Never do dual-status. You can always file 1040, so, again, it really doesn't matter, but moving after July 1 gives you the choice.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

chicagobuy
Posts: 4
Joined: Wed Jan 20, 2016 8:03 pm
Location: Canada

Re: Part year resident Tax in Canada and US - When to move to US

Post by chicagobuy » Sun Feb 03, 2019 12:51 pm

Hi Nelsona, thanks for your help earlier.

This was my situation in tax yer 2016:
Worked in Canada from Jan 1 to July 10 only Canadian sourced income - paid taxes to CRA
Moved to US on July 11 until the end of the year (doesn't meet SPT in 2016 but meets SPT in 2017) and only US sourced Income

I am married.

I do not want to do full year 2016 US tax resident return since I am owing a tax liability to IRS even after foreign tax credit on my Canadian income.

For me married filing separately works best if I am using 1040 only for the part of the year I am US resident (July 11 to Dec 31 2016)

I am really confused about this dual status return and first year choice.
1. Does dual status return mean: 1040 NR for first part of the year (show no income since all income was Canadian sourced) and 1040 for the rest of the year (show only US sourced income for whole year)?
2. If I make first year choice do i get treated from July 11 to end of the year as resident and before that as a non-resident? OR do i get treated whole 2016 year as a resident?
3. Do I have to do married filing jointly after making this first year choice?
4. Can I do married filing separately 1040 from July 11 to end of the year as resident and not declare my Canadian income since i already paid tax on it?

Thanks a lot.

nelsona
Posts: 15948
Joined: Wed Oct 27, 2004 2:33 pm
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Re: Part year resident Tax in Canada and US - When to move to US

Post by nelsona » Mon Feb 04, 2019 2:02 pm

So, you haven't taken care of 2016 yet?!

As was probably explained to you back then, the best way to file is full year, but NOT using tax credits, using 2555 to exclude Cdn wages.

You canrwad up on dual-status in Pub 519 of course, but I will answer your current questions only, since you have left this way too long:
1. You show WORLD income for second part of year, not just US-sourced.
2. The first year choice is what allows you to do dual-status, which you can do by treaty anyways, it still makes you non-res for first part and resident for second part. I would just file 1040NR if that was the case.
3. No.
4. If you file dual-status, you MUST file married filing separately; you cannot file jointly if you file dual-status, you can only file jointly if you file 1040 full year, reporting world income for entire year.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

nelsona
Posts: 15948
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Part year resident Tax in Canada and US - When to move to US

Post by nelsona » Mon Feb 04, 2019 2:03 pm

Have you been in a coma for three years?
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

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