First Time filing Tax - TN

Mombo · Post by **Mombo** » Fri Jan 27, 2006 12:20 pm

I do know most of you have replied and I am picking bits and pieces to understand the tax filing: MY scenario is as follows:
1. Worked in Canada till May 2005
2. Moved to US on TN and working till todate.
3. I have bank,CC, OHIP etc of Canada.
4. I have SSN(obviously..that took several months to get).
5. I am married,my wife US citizen , she has no relationship with Canadian gov and I have not applied for any paperwork for her nor she has CC, accounts etc in Canada.
6. I still hold TN, I have not applied for US greencard and not planning to as I am hoping to return (to Canada) with her and file her canadian papers end of this year. So return back when I get her papers in 2007/008

Q1.How do I file US taxes? Am I a resident or still and alien?
Q2:Same as others, do I file Canadian tax as "resident",deemed resident", no person has been able to answer me correctly.
Q3. how do I report my US income?

Appreciating your time and response.

nelsona · Post by **nelsona** » Fri Jan 27, 2006 12:52 pm

Q1/2: Since your life, wife, and home are in US, you are a US tax resident (an alien resident to use the IRS terms).

For 2005, you will file a 'departure return' for canada, using the forms for your last province, and the "Emigrants guide" for 2005. You will have a depature date of may 2005.

For 2005 in US, you can either file dual-status, separately from your wife (she would have to file a separate 1040), or full-year 1040 jointly with your wife. On the joint 1040, you would report ALL your income for the year and either exempt the Cdn wages (by form 2555) and/or take a credit (Form 1116) or deduction (schedule A) for the Cdn taxes you paid/accrued. You have a choice in this area, and should consult IRS pub 519.

For 2006, you will file like any other US couple living in US.

In 2007, IF you should return to Canada, you will do whjat you did in 2005, but in reverse. Your wife will always file in US, and will file in Canada too ,only when she lives there.

I do not know why "no person has been able to answer me correctly" on your Cdn tax residency -- you obviosly haven't asked the right people.

Q3: Since you left canada and then statrted working in US, you do not report yourt US income on your Cdn return.

Just a couple of points though:

I would not be holding on to my OHIP. First, unless you made specific arrangements to keep it valid BEFORE you left, its dead. Also, even if it is still good, it doesn't protect you very well while in the US since it won't near;y cover your expenses. Don't rely on it in any event and ensure that you have proper med coverage thru your employer. Also, it could be used by CRA if they question your tax status. Same applies for any Provincial Drivers license you have -- it's dead, so get rid of it.

On having a TN while married to US citizen living in US. Your marriage is 'by definition' and intent to immigrate and is reason enough to (a) deny you entry on an approved TN, and (b) deny you a TN renewal whwether at the border or by mail. No TNer in your situation should delay in filing I-130/I-485/I-131/I-765 to protect your job and status in US.
You are at risk of being denied entry into US each time you leave, which would likely cost you your job, and would require you to remain outside US for several weeks to get permission to enter.

Because you have waited so long in doing this, you are already at risk of not getting your next TN.

Also, why go thru the effort to sponsor your spouse now, when you both seem to wish to stay in US. Sponsoring your spouse into canada will take no time at all when you fianlly do decide to move there; there is no reason to get this now, especially if it means that you will have to shift back to Canada

Tread carefully

Mombo · Post by **Mombo** » Fri Jan 27, 2006 1:11 pm

Thanks for the response. I am confuse and shocked and worried !

1. As a TN holder, can I get a Local state drivers license?
2. This question may be stupid, but may not be too. Am I late in fillingfiling I-130/I-485/I-131/I-765 ? Should I file before taxes or after taxes? Will that change my tax status?
3. I maintain bank account, personal loan that I have to pay in Canada. Does it mean that I am residence of Canada.
4. Is my wife info and income should be added Canadian tax?
5. If I file separate tax in US with my wife (dual 1040). Does it still mean I am a resident?

Thanks once again, I guess I needed to visit this site early.

nelsona · Post by **nelsona** » Fri Jan 27, 2006 2:16 pm

1. As a TN holder living in US you MUST get a local DL. And local insurance, and local plates.

2. This has nothing to do with taxes. It has everything to do with maintaining your legal right to work in US, and to enter US. Did you not yet consult an immigration lawyer when you married?

3. I already said you were US resident since may.

4. Already answered: she will only file in canada when she lives there.

5. Already answered: even if you elect toi be treated dual-status, this means tht you are resident at the end of 2005. You are resident by treaty, by presence test and by marriage to US citizen.

Mombo · Post by **Mombo** » Fri Jan 27, 2006 2:53 pm

Nelson,
Can you please summarize the forms that I need to fill for taxes in US?

Mombo · Post by **Mombo** » Fri Jan 27, 2006 2:56 pm

Please advise on the following:
1. I have RRSP and have inverted in stocks. what is your advise, should I withdraw my RRSP and sell the stocks, or I can still retain them?
If I retain, I have to file taxes again next year in Canada, but not sure what status to use?
2. About filing Canadian taxes, as I understand that I pay tax till MAy 2005. That means I do not have to declare my US income. is this right?

Thanks,

Mombo · Post by **Mombo** » Fri Jan 27, 2006 3:05 pm

Another thing I found on the discussion but not sure what kind of form is it "A resident who leaves during the year files a 'departure' return, and is not considered fully non-resident until the next tax year." Now I left mid of the year. do I file "depurture return" and what kind of form is it?

nelsona · Post by **nelsona** » Fri Jan 27, 2006 3:07 pm

I suggest you reread my original post on this thread. I said EXACTLY what you have to do for 2005 in canada.

Mombo · Post by **Mombo** » Fri Jan 27, 2006 3:21 pm

Nelson.
I have read what you said first and I also added other questions that I have not understood>

Please advise on the following:
1. I have RRSP and have inverted in stocks. what is your advise, should I withdraw my RRSP and sell the stocks, or I can still retain them?
If I retain, I have to file taxes again next year in Canada, but not sure what status to use?
2.Can you please summarize the forms that I need to fill for taxes in US?
3. What is "departure" return FORM?

nelsona · Post by **nelsona** » Fri Jan 27, 2006 3:38 pm

Your exit return will be a normal 2005 return used by any resident of your last province of residence, enhanced by information found in the "Emigrants" guide for 2005.
I already stated this.

I've answered enough for you for today... I tire of repeating things I've said 20 minutes ago.

Mombo · Post by **Mombo** » Fri Jan 27, 2006 4:33 pm

Thanks Nelsona, more questions on Monday, since you spent a good time on my answers, frankly, you are a nice person.

TN Holder · Post by **TN Holder** » Fri Jan 27, 2006 4:50 pm

Hey Mombo,

Please donâ€™t make Nelson angry, we need him for his advices.
So far I learned a lot from him . Nelson, please don't let Mombo discourages you.

Thanks

nelsona · Post by **nelsona** » Fri Jan 27, 2006 5:52 pm

I would suggest Mombo do a little more reading.

I try to answer a question only once.

Noithing that Mombo has asked cannot be found in my answers or where I point.

butlertl · Post by **butlertl** » Sun Feb 12, 2006 9:12 pm

I was married to a Canadian last Feb......we activated her green card (CR-1) at the end of October and she moved to the US on 27 Dec. As I read the above.....She would file a Canadian Departure Return....and, also she must file a US 2005 return. We plan to file a joint US return....she would report all income she earned in Canada (or what she supplied on her Canada Return?).....she has an $80,000 exemption.......and we can deduct taxes paid to Canada.......she would also file form 8891 for each RRSP she has.....Does that about cover everything?

Thanks

nelsona · Post by **nelsona** » Mon Feb 13, 2006 7:51 am

Pretty much.

the $80K exemption (form 2555) only applies to her WAGES, and then you can't use the foreign tax credit (or deduction) for the taxes paid on that excluded income.