IRS and State processing time in transition year

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
mikie
Posts: 25
Joined: Thu Jan 07, 2016 1:08 pm

IRS and State processing time in transition year

Post by mikie »

I moved from Canada to the USA in 2015. I am a dual citizen. My 2015 tax returns were filed with CRA, IRS, and AZ in late March 2016. I am using tax treaty to make the case for April 1, 2015 as date I took up US residency. Although CRA has assessed my return, I have heard nothing from IRS or AZ, although they both deposited my check back in March. Does anyone know about how long it takes IRS and AZ to assess my return in transition year?
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

IRS and state do not assess returns, and you should not expect anything from them. They cash your check or issue refund and that is it.

As a US citizen I would think you would have dealt with IRS before and knew this.

Your residency is not much of an issue for IRS or state, so I'm not sure what you are waiting to hear about?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
mikie
Posts: 25
Joined: Thu Jan 07, 2016 1:08 pm

Post by mikie »

Sorry, for the sake of brevity I grossly oversimplified. By apportioning my mainly pensionable income, I figured that I owed only $268 to the IRS in 2015. I was just wondering if that has been reviewed and accepted by the IRS. If I use the online procedure for checking on refunds, it comes back that my return is still being processed. Also, I will be asking CRA for a reassessment because they considered me to be a Canadian resident for all of 2015 for CPP and OAS purposes only, undoubtedly because that is what the info slips said. (My fault. I did not inform CRA of my NR status until early 2016.). So, I will be asking CRA for a reassessment. Perhaps erroneously, I thought it might make sense to wait until IRS and AZ had reviewed my returns.
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Not sure what you mean by Cdn resident for CPP and OAS purposes. Are you referring to benefits not taxed by Canada foe US residents?

If they accepted your departure date, they MUST accept your CPP/OAS date as well. The info slips are meaningless, since they would still pay you the benefit in any event, and it is not subject to mandatory withholding.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

As to the IRS online status, I suspect that any of us hwo looked at our return right now would see that it is still "in process", so I wouldn't worry about it.

Either way, you won't be hearing anything from them, unless there was an error.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
mikie
Posts: 25
Joined: Thu Jan 07, 2016 1:08 pm

Post by mikie »

Re CPP, I entered the portion of my total 2015 benefit received while a resident of Canada as my Retirement benefit, and noted that this portion was taxable. Re OAS, for Taxable pension paid I entered the portion received while a resident of Canada. Is this correct?
Since the CRA agent used the info slips that assumed that I was a resident of Canada for the entire 2015 year my taxable income and tax is higher than it should be, I think.
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You would report only the OAS and CPP paid out prior to departure. You can figure out which lines they go on. You would have indicated your departure date on your return.

A note explaining this to CRA would be useful.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
mikie
Posts: 25
Joined: Thu Jan 07, 2016 1:08 pm

Post by mikie »

I have prepared a T1 Adjustment Request. Can I somehow submit this online? When I try to use the Submit Documents tab on the CRA website, the 2015 Tax Year is not an option that comes up.
SM
Posts: 94
Joined: Fri Mar 20, 2015 3:43 pm

Post by SM »

Just as you can`t efile a departure return, you can`t submit an adjustment to one online; it must be mailed to the international tax office.
stanm
Posts: 2
Joined: Tue Aug 02, 2016 2:14 pm

Post by stanm »

Hi Mikie and Nelsona,

I just had the exact same thing happen to my 2015 departure return regarding CPP and OAS. I’m a US citizen that departed Canada in July 2015 and received CPP, OAS and US SS. The odd part was CRA allowed the US SS to be prorated based on the departure date, but taxed the full amount of OAS and CPP for the entire year. I included a cover letter with my return outlining the specific treaty article that allows OAS, CPP and US SS to be taxed based on residency, but it didn't seem to help.

Furthermore, I was over the approximate $73K OAS clawback threshold and was supposed to pay back a portion of my OAS, but CRA removed the clawback amount that I originally included on my return and did not tax me on this.

Mikie, did CRA happen to mention anything in your Notice of Assessment specifically regarding the CPP and OAS? They didn’t for me, they just said I made a calculation error and my return was incomplete.

Nelsona, from what I can tell on this forum, OAS clawback is not applicable to residents of the US, but what about in the year of departure? My software calculated that the OAS clawback on my departure return was necessary; but CRA did not include it. Was this another mistake by CRA? Any suggestions on how I should fight the incorrect full inclusion of the CPP and OAS further?
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Anytime you disagree, the first thing is to call and try to explain, particularly since you already submitted an explanation.

Did you advise Service Canada at the time you left, or have you waited until later? In any event, if that doesn't results, file an objection. the CRA website has info on this.

As to the clawback, as a US-resident you are not subject to clawback. However, part-year is anyone's guess. I would have thought that meeting the threshold made you subject to clawback.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
stanm
Posts: 2
Joined: Tue Aug 02, 2016 2:14 pm

Post by stanm »

Thank you, I will call them to inquire further before filing the objection.

I did not inform Service Canada right away, it was several months after I left.

I will keep you and Mikie posted on any additional info I receive from CRA on this matter.
mikie
Posts: 25
Joined: Thu Jan 07, 2016 1:08 pm

Post by mikie »

The CRA assessment simply stated that OAS and CPP amounts had been changed to agree with the info slips, and that related credits and calculations were changed accordingly. My March 31 departure from Canada was otherwise accepted by CRA, even though all info slips were not accurate. I did not notify Service Canada of my USA residence until 2016 and other various financial institutions until late 2015 of my March 31 departure. Have people had good luck when they call CRA? I have never tried, simply because I have found that most telephone calls in today's world tend to be answered by uninformed individuals. If CRA is different, and if they would actually pull up my return while we talked, that would be great.
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Oh no, I would not expect success, nor even consistency from CRA, but call them first before filing an objection, which would be your only recourse.

I came up with the term telephlunkies 15 years ago based on the performance of that very organization.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
mikie
Posts: 25
Joined: Thu Jan 07, 2016 1:08 pm

Post by mikie »

Update. A CRA agent told me that their computer automatically changes OAS and CPP amounts to match the tax slip no matter what the tax payer puts on their return. My T1 adjustment request is still (after 3 months) being processed.
Post Reply