First year moving to the US

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vduclos
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Joined: Mon Feb 12, 2018 11:58 am

First year moving to the US

Post by vduclos »

Here is my situation: moved to the US from Canada with wife and two kids on 1 September 2017. I am working on a H1B, wife not been working so far. We all are Canadian citizens. We severed ties to Canada, meaning we only went back once, and have no property there. Almost no bank accounts either. After reading through the posts, my understanding is:

- I file a 1040NR in the US, since I am non-resident after only 4 months.
- Filing status: ‘Married resident of Canada or Mexico or married U.S.
national’. Or should it be ‘Other married nonresident alien’ (since we are no longer Canadian resident, for tax purposes)?
- I take it my wife will need a ITIN, as will the kids, if I want to claim them as dependents. Correct?
- Does my wife, who has not worked, need to file anything else?
- In Canada, my understanding is that we file both a departure tax and normal income tax for year 2017. We should avoid double taxation since we stopped being residents when we left, correct?
nelsona
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Post by nelsona »

For the purposes of this years 1040NR, you may choose the married resident of Canada, sine you are allowed to claim your spouse as an exemption, you will need to file a w-7 with your return to get ITIN.
She does not have to file in US this year.

You are incorrect about how you will file in Canada. You will each file a departure return only. It is filed with the normal form for your province of departure. You do not each file two Cdn returns. By putting your departure date, software will handle correctly. You will not have to report any US income earned after the departure date.
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nelsona
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Post by nelsona »

Since you are married, you can look also into filing a joint 1040 with your spouse, which would allow you to claim a better taxrate as well as better deductions.

You would have to report all your income for the year, but would be able to exclude your wages using 2555 and get foreign tax credit for Cdn taxes paid on the other Cdn income you earned. A little more complicated, but can save you some US tax. This would definitely be the case if you moved before July, but it can work for later arrivals like your family.
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vduclos
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Post by vduclos »

Thanks so much. I have another perhaps more tricky question. I have started working in the US on 1 September. But I officially moved in (got H1B activated) on 21 August, and my family on 28 August. Now , until 31 August I was still employed in Canada. We also had a lease signed in Canada until 31 August. In other words, what would my departure date be? My guess is 28 August, since that is what CRA regulations suggest (latest of myself or family moving out). If it is 28 August, does that mean that I have to declare these few days of works when filing in the US? Thanks again.
nelsona
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Post by nelsona »

For the matter of a few days of employment in US, that will not make your US employment income taxable in Canada.

I'm not sure whayt you mean by "got my H!-B activated" as opposed to starting to work. Obviously there is an expectation that yo uwill not be on the job the instant you got your H1B.

Your departure date is when you left canada to work, moving into an place to live. In this case the exact date your family moved doesn;t matter, nor lease, quitting day etc.
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vduclos
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Post by vduclos »

What I meant is that I worked until 31 August in Canada, and started working on 1 September in the US. I obviously moved into the US a few days prior to the first working day. But I was still being paid in Canada. So I just wanted to confirm if I have to declare (in the US) these few days where I was still on pay in Canada, but had actually already moved into the US.
nelsona
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Post by nelsona »

Well, since you're filing a 1040NR, Cdn-source income wasn't ever going to be reported on it, only US-source.

The question you would be really asking is whether the US income earned before you officially left should be included on your Cdn return, since you need to report world income until departure date. With that in mind, re-read my answer.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
vduclos
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Post by vduclos »

Thanks. It indeed makes sense that it won't affect the 1040NR. I did not have any US income before I left Canada. What I had though is Canadian income after leaving Canada (during one week). Should this income be reported as regular Canadian income in my Cdn return?
nelsona
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Post by nelsona »

Yes, it always would be, regardless of when you left Canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
vduclos
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Post by vduclos »

Lastly:

Can we submit departure return in Canada using regular software and online submission (I normally use UFile), or do we need to send it by mail (as I read some blogger suggesting)?

In the US, my employer wants to handle it through Glacier system. Makes sense?

Many thanks.
nelsona
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Post by nelsona »

You can definitely use Ufile to do your departure returns. whether you can Netfile or not is another issue, but in any event, departure returns are not processed in the usual manner and are usually processed in Aug/Sept.

as to how your firm wants you to have your US taxes done, If they are paying for it, use them, but they *seem* to specialize in non-resident filing and are probably not up to speed on tax treaties etc. use them, but if they disagree with anything that is stated here, I would be asking questions. You are ultimately the one that signs your tax return, so you are responsible for doing them correctly. IRS doesn't mind however, if you overpay your taxes by failing to take a legitimate taxrate, credit, etc.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Post by nelsona »

Theuy will do what is easiest for them. and since they are not looking at your Cdn tax return, they may not claim what they should, or look at various options.

They will simply file 1040NR.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
PeterWarker102
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Re: First year moving to the US

Post by PeterWarker102 »

I also moved with my wife, but we immediately found a job for the two of us to get the child into kindergarten. We were lucky. We took advantage of https://sekamoving.com/moving/college-movers/ and applied for the kindergarten waiting list. This is to have time to do the paperwork and benefits. When we moved back to the US, we moved our applications and returned our accounts to the co-op America to get on the books and pay taxes. No problems with married/unmarried aliens and residents ever. So try filing and making a personal account for the IRS. That's usually where the problems start.
mcj
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Joined: Sat Apr 23, 2022 6:31 pm

Re: First year moving to the US

Post by mcj »

This is also my first year moving to the US, but my situation is different and I'm also wondering about the process.

I am a Canadian citizen with a green card and my husband is a US citizen with a Canadian work visa. We have a property in Canada and one in the US, both are currently rented. We moved from Canada to the US in 2021 and it was the first year we both received income from both countries. This is my first year filing taxes in the US.

It seems like we're being double taxed on both countries, particularly in Canada and we're wondering if that's how it's supposed to be or is there's any way the double taxation can be reduced?
nelsona
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Re: First year moving to the US

Post by nelsona »

it is reduced by taking credit for the one countries taxes, on the other countries income. But if you moved to US, you should inly be reporting income earned in the early part of the year to Canada, on your departure returns.

Your situation is complicated, yes, so requires time and effort to resolve, beginning EARLY in the tax season.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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