I saw in your previous post, you mentioned husband could use treaty to break tie so that he could be deemed as non-resident in Canada and pay his US income tax to US only.
Assume wife live in Canada, no income and husband live in US with US as his tax home. Wife file canada tax return (not using software), stating husband is treay-deemed non-resident, and don't get any advantage from husband's zero Canada income. While husband file US tax, and claim wife as dependent which means file as MFJ, is it ok? Or must husband file MFS to avoid canada tax?
thanks
follow up question about US/CAN tax
Moderator: Mark T Serbinski CA CPA
"A husband supporting a wife in Canada is considered a Canadian tax resident".
Yes, but such a husband living in US is also considered a US tax resident, thus would have to apply the treaty to determine residence.
In such a tie-breaker, in my opinion, only the fact that the husband is a <b>US citizen</b> will tip the scale towards US residency.
If the husband is any other nationality, the tie would go to Canada, and he could not claim non-resident status, deemd or otherwise.
That was a major point in the other post by gpacino. HE is a US citizen.
But what rhaollan says about how you file in US not affecting how you file in canada, that is true.
Except in the case where one claiming to be a non-resident of canada, files a 1040NR. this would be viewed by canada as not having broken Cdn ties, even minute ones.
So in a borderline case, it is always advisable, even if one has not yet met the SPT for the year (eg when he moves to US late in the year), to make the first-year choice and wait until SPT is met in year 2, and file a part-year 1040. THis would be an indication of TRULY becoming a US tax resident, rather than merely electing to be so treated.
<i>nelsona non grata</i>
Yes, but such a husband living in US is also considered a US tax resident, thus would have to apply the treaty to determine residence.
In such a tie-breaker, in my opinion, only the fact that the husband is a <b>US citizen</b> will tip the scale towards US residency.
If the husband is any other nationality, the tie would go to Canada, and he could not claim non-resident status, deemd or otherwise.
That was a major point in the other post by gpacino. HE is a US citizen.
But what rhaollan says about how you file in US not affecting how you file in canada, that is true.
Except in the case where one claiming to be a non-resident of canada, files a 1040NR. this would be viewed by canada as not having broken Cdn ties, even minute ones.
So in a borderline case, it is always advisable, even if one has not yet met the SPT for the year (eg when he moves to US late in the year), to make the first-year choice and wait until SPT is met in year 2, and file a part-year 1040. THis would be an indication of TRULY becoming a US tax resident, rather than merely electing to be so treated.
<i>nelsona non grata</i>
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote">Correct. But, strictly speaking, it is not the U.S. 1040NR filing that's the issue, but whether one files as a tax resident anywhere else besides Canada. If not, then yes, he would be a tax resident of Canada.<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
We are all talking about US/Canada taxation here, rhollan.
My next sentence clearly confirmed this.
<i>nelsona non grata</i>
We are all talking about US/Canada taxation here, rhollan.
My next sentence clearly confirmed this.
<i>nelsona non grata</i>
As you know, rhollan, if you were, for example to move to US on July 2nd 2005, you would not be considered a US tax resident by IRS until, at the earliest, April 1st 2006, and that would be if one never left US during that entire time.
Remember, you cannot take a treaty position on residence until you meet the other countries own residency rules.
Under your logic, since one has yet to establish tax residency elsewher, Canada could continue taxing you until Aptril 1, 2006 or later.
If you filed a 1040NR for 2005, which would be completely within one's right, CRA could say you aren't a US resident yet, and keep taxing you, and you would not be able to say a thing.
However, if you made the election to file part-year 1040, indicating to IRS that you are becoming a resident, you would be able to point to this as an indication of intent.
So, inded it does matter how you file.
<i>nelsona non grata</i>
Remember, you cannot take a treaty position on residence until you meet the other countries own residency rules.
Under your logic, since one has yet to establish tax residency elsewher, Canada could continue taxing you until Aptril 1, 2006 or later.
If you filed a 1040NR for 2005, which would be completely within one's right, CRA could say you aren't a US resident yet, and keep taxing you, and you would not be able to say a thing.
However, if you made the election to file part-year 1040, indicating to IRS that you are becoming a resident, you would be able to point to this as an indication of intent.
So, inded it does matter how you file.
<i>nelsona non grata</i>
I agree, you are splitting hairs.
There isa a differnce between saying "I want to be taxed as a resident of US" and actually making an irrevocable choice to do so (which is the election).
Filing a 1040NR when one could elect to file a 1040 is a known issue that CRA has indeed used. Cros border experts (not me) always suggest making the election if one can and has some underlying residency uncertainty (like a Cdn job).
There's lots of info out there.... Peck, Keats, the grasmick forum, enjoy browsing.
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote">though would require amending that return if it turned out one did not meet the SPT the next year. <hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Making the choice requires one to actually wait until SPT is satisfied before submitting the part-year 1040, so that situation is not possible. You actually have to show your calculation, give them the day=te taht you met SPT, and file your tax return after that date.
waiting to be able to file a 1040 is one thing, and shows intent. Filing a 1040NR is another, and indicates a reluctance to be resident in either country, a reluctance that CRA will happily take as intent to maintain Cdn residency, no less than when the wife stays back in canada for a year or 2.
<i>nelsona non grata... and non pro</i>
There isa a differnce between saying "I want to be taxed as a resident of US" and actually making an irrevocable choice to do so (which is the election).
Filing a 1040NR when one could elect to file a 1040 is a known issue that CRA has indeed used. Cros border experts (not me) always suggest making the election if one can and has some underlying residency uncertainty (like a Cdn job).
There's lots of info out there.... Peck, Keats, the grasmick forum, enjoy browsing.
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote">though would require amending that return if it turned out one did not meet the SPT the next year. <hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Making the choice requires one to actually wait until SPT is satisfied before submitting the part-year 1040, so that situation is not possible. You actually have to show your calculation, give them the day=te taht you met SPT, and file your tax return after that date.
waiting to be able to file a 1040 is one thing, and shows intent. Filing a 1040NR is another, and indicates a reluctance to be resident in either country, a reluctance that CRA will happily take as intent to maintain Cdn residency, no less than when the wife stays back in canada for a year or 2.
<i>nelsona non grata... and non pro</i>
I wonder what would happen if a perpetual tourist became tax resident in Canada for a while, and then returned to being a perpetual tourist -- would the "stigma" of Canadian tax residency stick with them?
Of course, this is ia serous dilemma that Cdns (albeit a tiny fraction) who want to 'sail the seas' often face.
It is very important for such ones to first establish a tax residency elsewhere before they become a tourist.
Its the same for those, say leaving US to return to Canada, but for some tax reason absolutely do not want to re-establish Cdn ties before a particular date, and thus decide to 'travel' before settling back in Canada.
Those in such situations are usually advised to not even set foot in Canada until they setlle, since even a visit, since they now have no tax home, could be viewed as the start date of tax residency, on the basis of intent.
<i>nelsona non grata... and non pro</i>
Of course, this is ia serous dilemma that Cdns (albeit a tiny fraction) who want to 'sail the seas' often face.
It is very important for such ones to first establish a tax residency elsewhere before they become a tourist.
Its the same for those, say leaving US to return to Canada, but for some tax reason absolutely do not want to re-establish Cdn ties before a particular date, and thus decide to 'travel' before settling back in Canada.
Those in such situations are usually advised to not even set foot in Canada until they setlle, since even a visit, since they now have no tax home, could be viewed as the start date of tax residency, on the basis of intent.
<i>nelsona non grata... and non pro</i>
Just a follow-up for further info I could use.
I always thought that if I worked (as a Canadian citizen / US resident / Canadian non-resident) in the US until, say, July 3 of a particular year, and then travel back to Canada and enjoyed life there doing no work, keeping my US drivers license, keeping my US address, mail, credit cards, etc. until the end of the year.
Then on January 1, go into the US to pick up mail, etc. and then turn around and claim I'm now going to be a Canadian resident, etc.
From the last post, my intent is obvious - to avoid being a Canadian resident until the start of the next year.
Is this something I should now be careful of screwing up and Canada trying to claim me as a resident (and therefore taxable) on the previous year's income (before the Jan/1 turnaround)?
Thx. as usual.
I always thought that if I worked (as a Canadian citizen / US resident / Canadian non-resident) in the US until, say, July 3 of a particular year, and then travel back to Canada and enjoyed life there doing no work, keeping my US drivers license, keeping my US address, mail, credit cards, etc. until the end of the year.
Then on January 1, go into the US to pick up mail, etc. and then turn around and claim I'm now going to be a Canadian resident, etc.
From the last post, my intent is obvious - to avoid being a Canadian resident until the start of the next year.
Is this something I should now be careful of screwing up and Canada trying to claim me as a resident (and therefore taxable) on the previous year's income (before the Jan/1 turnaround)?
Thx. as usual.
If you as you say, "travel back to Canada and enjoyed life there doing no work", you will most definitely be viewed as having returned on July 3rd, as it would be obvious your intent to return to Canada, otherwise you would have went there instead.
What would you be doing in Canada? staying at a motel, friends? And would you have maintianed legal status in US during this time?
Would you ahve opened a bank account, transferring money up from US?
For what you would want to do, you would need to avoid Canada altogether until Jan 1.
<i>nelsona non grata... and non pro</i>
What would you be doing in Canada? staying at a motel, friends? And would you have maintianed legal status in US during this time?
Would you ahve opened a bank account, transferring money up from US?
For what you would want to do, you would need to avoid Canada altogether until Jan 1.
<i>nelsona non grata... and non pro</i>