Questions about US-Canada taxes for 2018

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.

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madg05
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Joined: Tue Mar 26, 2019 4:50 pm

Questions about US-Canada taxes for 2018

Post by madg05 » Tue Mar 26, 2019 5:05 pm

**Re-posting since the previous one got posted without a proper title.

Hello,

Firstly, I'd like to say that this forum is AMAZING. There's a wealth of knowledge here and other articles I have read on Serbinski's website are also quite impressive. This is the first firm I have come across in my research that has provided so much knowledge and really seems to understand US + Canada taxes in depth.

I moved to the US for work from Canada (TN visa) in May 2018 and am keeping both tax residencies, US (no choice) and Canada (by choice due to personal reasons), for 2018. I have a few questions that I need to answer before I decide how to approach my Canadian taxes, i.e. do them myself vs. get a professional to do them, depending on their complexity. Would love guidance from the professionals at Serbinski:

1) If I stay as a tax resident of Canada, do I have to declare 100% of US income from 2018? What I'm wondering is - is there a way to show partial US income in Canadian tax filing, i.e. declare non-residency of Canada after Sep'18 and only show US income from May-Sep to reduce taxes owed in Canada? But would this remove Canadian residency as well post Sep'18?

2) I read somewhere on the forum that there is a way to use social security tax and medicare tax to reduce taxes in Canada? Would really appreciate guidance on this since I haven't found a way to do this so far.

3) If I decide to become a non-resident of Canada starting 2019, do I just stop filing taxes or is there a formal process that I have to go through? I still have bank accounts and credit cards in Canada which I will be keeping, so would like to know if I need to take any action.

4) Does Serbinski help with the FBAR process? Is it an annual process?

Thank you very much in advance,
Maddy

nelsona
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Re: Questions about US-Canada taxes for 2018

Post by nelsona » Wed Mar 27, 2019 5:25 am

I'm not a big fan of dual residency, and nor is CRA. Either you are a Cdn resident, or you are not. The treaty doesn't allow for both.
You would need to describe your situation, and why Sept 18 would be a departure date rather than May 18, or Jan 1, 2019. It's not a pick-and-choose thing. It's based on facts.

But, in general, while Cdn tax resident, you report world income to CRA. If including US income, you can claim fed/state tax (as determined on your return, as well as FICA towards the foreign tax credit.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

madg05
Posts: 6
Joined: Tue Mar 26, 2019 4:50 pm

Re: Questions about US-Canada taxes for 2018

Post by madg05 » Wed Mar 27, 2019 12:54 pm

Thanks for your insight!

I agree, dual residency is not ideal. I will likely stick to being a US resident starting Jan 1, 2019. I need to stay a Canadian resident for 2018 for immigration purposes.

Going to #3 and #4:

3) If I decide to become a non-resident of Canada starting 2019, do I just stop filing taxes or is there a formal process that I have to go through? I still have bank accounts and credit cards in Canada which I will be keeping, so would like to know if I need to take any action.

4) Does Serbinski help with the FBAR process? Is it an annual process?

Thanks!
Maddy

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Questions about US-Canada taxes for 2018

Post by nelsona » Wed Mar 27, 2019 2:20 pm

You need to file a departure return, with a real departure date, which I somehow doubt was jan 1 2019. I'm quite familiar with immig processes, and cannot think of a reason why faking an address in Canada would benefit you. You moved in May.
FBAR is easily done on the US govt website for it. No need for a pro to get involved.

And I know nothing about what serbinski does or doesn't do.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

madg05
Posts: 6
Joined: Tue Mar 26, 2019 4:50 pm

Re: Questions about US-Canada taxes for 2018

Post by madg05 » Thu Mar 28, 2019 6:18 pm

Hey Nelsona,

Got it.

And there's no fake address. I actually have a home (with extended family) that I live with in Canada. The immigration reason isn't for myself, it's for parent sponsorship. I need to stay resident of Canada and have certain income requirements to sponsor them this year.

I also hope to transfer back to Canada as well which is why I'm hesitant to give up residency just for one year. But if I absolutely have to give up residency, I'd want to do it starting 2019 so it doesn't affect the sponsorship application and I still have time to move back to Canada.

With the departure return, do you have any thoughts on how/if I can file 2019 return as departure return? As you can see, this isn't just about taxes, it's also about sponsorship which is much more important, which is why I would be willing to pay the extra taxes in Canada when I don't need to.

Thanks for your help!

nelsona
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Re: Questions about US-Canada taxes for 2018

Post by nelsona » Thu Mar 28, 2019 9:15 pm

Understand. But realize that CRA can invoke non-residency on you.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

madg05
Posts: 6
Joined: Tue Mar 26, 2019 4:50 pm

Re: Questions about US-Canada taxes for 2018

Post by madg05 » Wed Apr 03, 2019 6:24 pm

Sorry, what do you mean by "invoke non-residency on you?"

Also, do you provide tax/consultation services directly? That might be the best way to get in touch, if possible. Would greatly appreciate it!

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Questions about US-Canada taxes for 2018

Post by nelsona » Wed Apr 03, 2019 7:03 pm

CRA can "deem" you non-resident if you become tax resident of another country, which for US would be if you met SPT. They would then decide your non-residency date and trigger departure tax.

Better that you be in control of this, and use a date when you actually moved as your departure date.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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