Conflicting opinions from IRS/forum/h&r - Left USA mid year for Canada.

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cosurshe
Posts: 13
Joined: Sat Mar 16, 2019 12:15 pm

Conflicting opinions from IRS/forum/h&r - Left USA mid year for Canada.

Post by cosurshe »

So, after reading a bunch of posts about dual status filing, and Nelsona's responses to my post, and H&R Block, I decided to contact IRS about how to file for 2018.

Here are the facts:
2016 days in US: 365
2017 Days in US: 365
2018 Days in US: 160 (Moved to Canada in 2018)

1. F1 students (both husband & wife) in USA for 10 years.
2. Canadian Permanent Residents.
3. Citizens of India

Wages from US employer
Me: 21k USD (of which 15k was made while residing in USA, and 5k after leaving USA)
Wife: 65k USD

Consulting income from US client:
Me: 1.5k (made after moving to Canada, all the work was done in Canada)

Wages from Canadian Employer (earned in Canada)
Me: 15k USD
Wife: 75k USD

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Based on Nelsona's comments, we though we'll file a 1040 for the whole year, report world wide income, with FEIE or FTC after passing PPT.
However, after talking to IRS helpline, they said that I should be filing a 1040NR (not even a dual status :facepalm:) which made no sense..
and H&R Block is filing 1040 with some form of statement indicating I have closer ties to Canada (which again makes no sense.. ).


So, after looking at all of these recommendations, Nelsona's comments make the most sense. However, no matter what method I use (FEIE or FTC) it looks like we end up paying a lot more tax (in USA) if we use 1040 instead of a 1040NR (dual status).

A 1040 with just US based income (MFJ) gives us about 5k back in refund. Add in the foreign income (Canadian wages + self employment) and instead of a refund, we now owe something like 12k. FEIE doesn't work out too well (since we weren't in Canada for the whole 2018, but just about 0.56 of the year.

After filling up all the details on turbotax, it shows that we owe 10k USD in taxes.. which is nuts! But we've already paid taxes with CRA..


Would someone who has been in a similar situation, please walk me through what you did to file your taxes?
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