Dual-Status Alien -residency termination date

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Kuchie
Posts: 3
Joined: Mon Apr 08, 2019 5:08 pm

Dual-Status Alien -residency termination date

Post by Kuchie »

I believe I have this figured out, but between different publications, instructions etc, it can be confusing, so I'd like to ask the community to verify.

I am a Canadian citizen who was a US Long Term Permanent Resident (LTR) until I quit my job and moved back to Canada in 2018. I moved back to Canada at beginning of June but didn't officially 'abandon' my Green Card until August when I filed I-407. I need to determine both my expatriation date for Form 8854 and residency termination date for filling US income tax. I will be filing as a Dual-Status (DS) Alien filling out 1040NR as the primary return with the 1040 as the Dual-Status statement. [I know in other posts nelsona has stated he believes it is usually better to just declare one a year long resident and file a 1040 for the entire year, but I have a tax situation where it is beneficial for me to be DS - basically the extra amount I would gain from claiming the standard deduction is less than the extra taxes I would have to pay on a capital gain that would become taxable if it occurs when I am considered a US tax resident - I sold a stock for a gain later in the year]

The rules to determine the dates say to use the earliest date of several options. Option #4 states: "If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you commenced to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and gave notice to the Secretary of such treatment on a Form 8833 attached to a timely filed income tax return. See Regulations section 301.7701(b)-7 for information on other filing requirements if you are such an individual."

So reading the US/Canada Tax Treaty (specifically Article IV (2a)), I become a Canadian tax resident in June when I establish my permanent residency there. This is earlier than my LTR abandonment date and becomes both my US expatriation and residency termination dates. I would fill out form 8833 to attach to my return citing Article IV (2a). Is this correct?

As I said, this is how I read it, but there are people on this board with much more history, experience and knowledge on these matter who I'm hoping to either confirm it or correct me if I'm wrong.

Thanks in advance,

Kuchie
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