My husband and I recently returned to Canada after a two and a half year stint in the US.
We hired a professional (that's what he says he is) to do our US/CDN tax returns and he said we couldn't file a jointly in the US. Is this true? I didn't work while in the US so you can understand we owe a LOT of $$$, because of this.
I read-up a little and it looks like there is a "substantial presence test" and we pass. Is that enough to be able to file as Resident aliens for the 2004 tax year? Or does the fact that we were non residents on Dec 31, 2004 require us to file dual status, thus not allowing us to file jointly? (BTW. we were only in Canada as of Nov 6 2004, the rest of the time we were in the US)
Thanks for your help,
Natalie
Dual tax status?
Moderator: Mark T Serbinski CA CPA
The same options are avaiable when leaving US as when entering.
Even FEIE is still available, by waiting until you have satified the physical presence test.
I think it can be done under IRS rules, but most certainly can be done by invoking either XXV.1 or XXV.2
<i>nelsona non grata... and non pro</i>
Even FEIE is still available, by waiting until you have satified the physical presence test.
I think it can be done under IRS rules, but most certainly can be done by invoking either XXV.1 or XXV.2
<i>nelsona non grata... and non pro</i>
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote">If you elect FEIE, you have to always use FEIE in the future (when you can) unless the IRS permits otherwise.<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Not quite. To be accurate, if you elect to use FEIE and then switch to FTC (this applies only to the excludable income of course) for any year, then you won't be allowed to switch back to FEIE for 5 years, unless you get IRS approval.
<i>nelsona non grata... and non pro</i>
Not quite. To be accurate, if you elect to use FEIE and then switch to FTC (this applies only to the excludable income of course) for any year, then you won't be allowed to switch back to FEIE for 5 years, unless you get IRS approval.
<i>nelsona non grata... and non pro</i>
Sorry if this is a dumb question, but do you think you could put that in layman's terms? I really don't get the FEIE and other FTC stuff.
I spoke to my accountant again today and he said he has no problem filing a joint return. I guess what I said to him must have made a little sense. He did say thought that at some point we will need to file a dual status return (he said for Jan 2005). So that we let the IRS know that we are no longer US residents. Does this make sense? Since we wont have ANY US income in 2005 isn't that a better option for us or will it come back to haunt us?
The reason we want to file a joint return is that I had NO income in 2004 and joint return reduces the amount owing by approx $3000. Is this amount worth it or is it just best to pay it and be done.
Again I'm lost here and completely at the mercy of him or anybody who replies.
Thank you VERY much for your replies, they are very appreciated.
I spoke to my accountant again today and he said he has no problem filing a joint return. I guess what I said to him must have made a little sense. He did say thought that at some point we will need to file a dual status return (he said for Jan 2005). So that we let the IRS know that we are no longer US residents. Does this make sense? Since we wont have ANY US income in 2005 isn't that a better option for us or will it come back to haunt us?
The reason we want to file a joint return is that I had NO income in 2004 and joint return reduces the amount owing by approx $3000. Is this amount worth it or is it just best to pay it and be done.
Again I'm lost here and completely at the mercy of him or anybody who replies.
Thank you VERY much for your replies, they are very appreciated.
I'm sure nroy understands think <i>much</i> better now.
Since nroy has left US, there is little benefit in her learning the ropes of US taxation at this point.
nroy, just tell your accountant to file a joint 1040 using FEIE, Form 2555.
Filing a 1040NR for next year (2005 tax year) is not a bad idea. It will simply inform IRS that you've left, although it is not absolutely required.
rhollan's repeated rehash of what I taught him, though flattering to me, is of little use to you.
All the T's have been crossed, and all the I's dotted -- elsewhere on this site. The I's and T's are getting a little hard to see from the repetitive dotting and crossing.
<i>nelsona non grata... and non pro</i>
Since nroy has left US, there is little benefit in her learning the ropes of US taxation at this point.
nroy, just tell your accountant to file a joint 1040 using FEIE, Form 2555.
Filing a 1040NR for next year (2005 tax year) is not a bad idea. It will simply inform IRS that you've left, although it is not absolutely required.
rhollan's repeated rehash of what I taught him, though flattering to me, is of little use to you.
All the T's have been crossed, and all the I's dotted -- elsewhere on this site. The I's and T's are getting a little hard to see from the repetitive dotting and crossing.
<i>nelsona non grata... and non pro</i>
Thank you VERY much for all this information. I understood most of it. At least what I need to know 
Just to put your mind at ease, we didn't hire H&R block to do our returns. We are with Collins Barrow, a local firm. The guy doing it is a CPA and a CA. They are charging us $600.00 to do the dual return. I can't say that I'm 100% confident that he knows what he's doing and so I think I'm going to have it reviewed. We had an AWSOME specialist do our returns when we left Canada (Ernst & Young) but they charge $1500. That was ok when my husbands company was paying, but I wasn't prepared to pay that out of my pocket.
Had I known that Mark Serbinski does taxes for Canadians I would have DEFINATELY hired him. I just found this forum a little too late. Maybe he would be interested in reviewing the return? I guess I'll have to look into that.
Thanks again,
Natalie
Just to put your mind at ease, we didn't hire H&R block to do our returns. We are with Collins Barrow, a local firm. The guy doing it is a CPA and a CA. They are charging us $600.00 to do the dual return. I can't say that I'm 100% confident that he knows what he's doing and so I think I'm going to have it reviewed. We had an AWSOME specialist do our returns when we left Canada (Ernst & Young) but they charge $1500. That was ok when my husbands company was paying, but I wasn't prepared to pay that out of my pocket.
Had I known that Mark Serbinski does taxes for Canadians I would have DEFINATELY hired him. I just found this forum a little too late. Maybe he would be interested in reviewing the return? I guess I'll have to look into that.
Thanks again,
Natalie
As I have explained, there are so few treaty positions which actually require an 8833, that filing one is quasi-optional.
I could make a clear case for not requiring the treaty for FIEI in either arrival year or departure year.
I won't make that argument to spare the board, and for fear that you will repeat it here every few days.
<i>nelsona non grata... and non pro</i>
I could make a clear case for not requiring the treaty for FIEI in either arrival year or departure year.
I won't make that argument to spare the board, and for fear that you will repeat it here every few days.
<i>nelsona non grata... and non pro</i>
I explained the limits of 8833 (directly in response to you) elsewhere, feel free to look for the explanation.
The IRS website also explains the long list of exceptions.
I don't understand why having to use 8833 is discrimanatory against non-citizens. In fact, treaties in general are discriminatory AGAINST US citizens, since many of the provisos in threaties are taken away from US citizens (the saving clause).
Much of the tax maneouvers that we discuss here for those leaving US (like the capital gains holiday) and other things, which rely on the treaty, are not even available to US citizens.
The treaty has an Artlicle XXIX with a listing all the Articles that can't be used by US citizens, and those that can. Canada doesn't use such a clause.
<i>nelsona non grata... and non pro</i>
The IRS website also explains the long list of exceptions.
I don't understand why having to use 8833 is discrimanatory against non-citizens. In fact, treaties in general are discriminatory AGAINST US citizens, since many of the provisos in threaties are taken away from US citizens (the saving clause).
Much of the tax maneouvers that we discuss here for those leaving US (like the capital gains holiday) and other things, which rely on the treaty, are not even available to US citizens.
The treaty has an Artlicle XXIX with a listing all the Articles that can't be used by US citizens, and those that can. Canada doesn't use such a clause.
<i>nelsona non grata... and non pro</i>