tax questions

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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kashe
Posts: 3
Joined: Wed Mar 02, 2005 8:50 pm

tax questions

Post by kashe »

I am a canadian, who has lived in the U.S. for the last 10 years. I moved back to Canada July 5th with my fiance who is an American citizen without work privileges at this time. I have filed my U.S. taxes and when I tried to file my Canadian taxes today, I was told I had to pay taxes on my U.S. income in Canada even though I have already paid taxes in the U.S. As well, I am unable to claim my fiance as a dependent, even though she had no income. Is this information correct?
I understand there is a rule about 183 days in country that I am afraid that I am misinterpreting.
Can anyone please answer this for me. I would certainly appreciate it.

Thank You, Kashe
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You became a Cdn tax resident on July 5th.

Any money (regardless of where it came from) received after that date is taxable in Canada. Canadian source income from before that date is also taxable in Canada.

If you received money from US after july 5th then yes you do have to report it even if you already were taxed in US. This means nothing in determining whether you have to report it in canada or not. You will get a foreign tax credit for the portion of US tax which relates to this income.

Look at the 'Newcomers' guide for CRA. You are not a resident for the entire year. The 183 day rule does not apply to you.

I suspect that when you say 'tried to file my taxes' that you are trying to e-file.

Don't e-file for this year. Use the software to prepare your taxes,making sure it states that you arrived on July 5th on page 1.

You should be able to claim your wife, although you may have to attach a statement describing her income (and yours) from before your arrival. Its called a schedule A.

Read over the newcomers guide.

Don't try to e-file.


<i>nelsona non grata</i>
kashe
Posts: 3
Joined: Wed Mar 02, 2005 8:50 pm

Post by kashe »

There was no income from the United states after July 5. My new job started that week here in Canada and the job from the states had ended.
I didnt try to e-file. I took all information to H&R Block and was told that I had to claim all income for the year here, wether earned here or not. Also, was told that I couldnt claim my fiance because she also earned income while in the United States. She has not made any income in Canada however.
Maybe I am making it too confusing but I assumed that I paid taxes to the country in which the money was earned and have already filed and paid taxes in the US.
Thank you for answering so quickly.

Thank You, Kashe
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

"Now, in the U.S., you met the substantial presence test and so will file as resident for all of 2004 (based on having lived in the U.S. for the past ten years). Thus, you will be taxed on your Canadian source income, unless you can exclude it, or elect to take a credit for the foreign taxes you paid "

This is not true.

A departing US resident, who is neither a Green Card holder nor a citizen, can declare himself non-resident on the date he establishes closer ties elsewhere.

This can be Jan 2nd, July 2nd, or Dec 2nd. <u>SPT does not enter into the equation.</u>

What that does mean however is one is choosing to be dual-status rather than full-year taxpayer (which is the default in all departure years).

It *may* be advantageous to do the FEIE as rh outlines, but it is by no means necessary. You can merely pay US tax on your US income on a 1040NR with a 1040 statement.

FEIE is probably unnecessarily complicated, and does not save much taxes, and you do have to wait to file your US taxes until later in the year.

And Cdns are not required to file a 1040C.

<i>nelsona non grata</i>
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

The deaprture year rules apply to anyone treaty or not.

The 1040C rules have so many exceptions that I would find it hard for anyone to HAVE TO file it.

In practice, no cdn has to file.

This may be by treaty (remember the non-discrimination clause), or simply by practice.

<i>nelsona non grata</i>
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