Canadian Inc/Sole Prop 1st Time Filing as US perm resident, Married

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lgk9
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Joined: Wed Feb 27, 2019 9:26 pm

Canadian Inc/Sole Prop 1st Time Filing as US perm resident, Married

Post by lgk9 » Thu Mar 07, 2019 2:55 pm

Hello, thanks for this valuable forum! I have found some answers here, but I want to make sure I do this correctly, as I am a new non-resident of the US and this is my first time filing tax for both Canada and the US.
Background: I'm a Canadian citizen, on January 12, 2018 I married a US citizen & applied for permanent residency. I was in the US for two months prior to this happening. I would see my date of becoming a non-resident of Canada being my marriage date.
I never made a penny of income in the US and have not filed a US tax return to date, just the 8843 form when I was an F1 student prior.
I received the Green Card in December 2018.
My spouse is employed in the US and files US taxes. Her income will be about $45,000 for 2018.
Just after my marriage in 2018 I received a lump sum from my locked-in RRSP under hardship, about 11,000 US.
I also run a sole proprietorship Etsy online business based in Canada with very little income. I usually have a small loss. I want to keep this business running.
I have paid tuition to an accredited college in the US and want to claim that.
I see I need to file a Departure Tax return from Canada, with forms T1161 & T1243 to include my Canadian vehicle worth over 10k, and probably for the business inventory assets as well? My only other asset is my locked-in RRSP.
It seems I'm filing a non-resident T1 return electing under section 217 of the income tax act for proper taxation.
It seems I will file a resident US return but I don't know what to include on that. Also, my spouse needs to know how & what to file on her return for my side of income from Canada.

My main questions are: am I missing any steps on the Canadian side as listed above or have anything incorrect there; how do I report and move my business to the US; how and what do I file in the US for this income and assets; how would my spouse file and what/how should my income/assets be included on her return...or is filing separately a better option? and how do we do this correctly so there is just one taxation in the end? Thanks so much for any help you can give!
Lori

nelsona
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Re: Canadian Inc/Sole Prop 1st Time Filing as US perm resident, Married

Post by nelsona » Thu Mar 07, 2019 3:15 pm

For 2018, your departure return is as an emigrant, not as a non-resident, so 217 doesn't apply yet. it would only apply to your LIRA payments. You would simply include the payment on your departure return.
Your will probably want to file as a joint couple for 2018 reporting ALL world income for both of you, as this will greatly reduce your spouse's income tax, and you have little income in Canada to worry about when it is included on your US tax return. IRS will give you credit for any Cdn ytax you pay on your return.
You will want to shut down Cdn "operations' of your etsy and move it to US
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

lgk9
Posts: 5
Joined: Wed Feb 27, 2019 9:26 pm

Re: Canadian Inc/Sole Prop 1st Time Filing as US perm resident, Married

Post by lgk9 » Sun Mar 10, 2019 3:08 pm

oh thank you so very much for the great information and clearing up my confusion! I know what to look into now. I really appreciate your help and support, it makes sense, just have to figure out the steps involved. Thanks again! :)

lgk9
Posts: 5
Joined: Wed Feb 27, 2019 9:26 pm

Re: Canadian Inc/Sole Prop 1st Time Filing as US perm resident, Married

Post by lgk9 » Wed Mar 20, 2019 11:09 am

nelsona wrote:
>
> You will want to shut down Cdn "operations' of your etsy and move it
> to US

Nelson I thought of another question related to this: my business usually generates a small loss which reduces the amount of my other income. can i file this loss on my IRS return as something like a "foreign business loss" if this exists (and if so, how please, in turbotax)? I'm guessing no as the business is still run in Canada. or just file on my Canadian emigrant return and it will have no consequence? as the business was run out of Canada at the time. thanks much!

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