How to file tax return as Canada PR with H1B

seektaxadvice · Post by **seektaxadvice** » Mon Apr 18, 2005 11:46 pm

I had worked in US for the last three years with H1B visa. Recently, I got my Canada Permanent Residence approved. I plan to land in Toronto recently. My wife will live there and I will immediately go back US. I also plan only stay in Canada for only month per year for the next three years. Each year for the last three years, I used Form 1040 to file US tax return. Under my new situation, what is the best strategy to file tax return to US and Canada? Am I a deemed non-resident for Canada tax purpose? Please advice. Thanks a lot.

nelsona · Post by **nelsona** » Tue Apr 19, 2005 7:39 am

You will be considered a deemed non-resident (as aopposed to a true non-resident) by virtue of your spouse living in Canada.

You will have to report all income in Canada, and then exclude the US portion on line 256.

You tax status in US is unchanged, but will now be able to exclude your spuose's Cdn wages by 2555.

nelsona non grata... and non pro

bhand11683 · Post by **bhand11683** » Tue Apr 19, 2005 1:07 pm

I thought if you have a spouse or a house (primary residence) you would be considered resident or deemed resident of canada.

nelsona · Post by **nelsona** » Tue Apr 19, 2005 6:58 pm

If you have a house or spouse in Canada you can only be a RESIDENT or (if you have more ties outside Canada than inside Canada) a DEEMED NON-RESIDENT

To be a DEEMED RESIDENT, you cannot be living in Canada, you would be outside Canada but working,for example, for the Cdn Gov't.

To be a NON-RESIDENT, you would have neither house nor spouse in Canada.

But thanks for playing our game, there will be lovely parting gifts...

nelsona non grata... and non pro

nelsona · Post by **nelsona** » Wed Apr 20, 2005 10:07 am

<blockquote id="quote">quote:<hr height="1" noshade id="quote">sufficient ties to Canada to be considered resident (bank account, RRSP, passport, etc.), <hr height="1" noshade id="quote"></blockquote id="quote">

The ties you mention are NOT sufficient to be considered resident.

nelsona non grata... and non pro

seektaxadvice · Post by **seektaxadvice** » Wed Apr 20, 2005 2:08 pm

Nelsona and others:

There is the following paragraph in the definition of the deemed non-resident from the document-Canadian Residents Abroad ( http://www.cra-arc.gc.ca/E/pub/tg/t4131 ... P178_17739 ):

â€œYou become a deemed non-resident of Canada when your ties with the other country become such that, under the tax treaty, you would be considered a resident of that other country.â€

Under US tax system, I am a resident of US for tax purpose. Since US and Canada has a tax treaty, does this mean that I will be considered as a deemed non-resident of Canada?

Please give your suggestion.

nelsona · Post by **nelsona** » Wed Apr 20, 2005 2:21 pm

Please re-read the first answer I gave to you:

<blockquote id="quote">quote:<hr height="1" noshade id="quote">You will be considered a deemed non-resident (as opposed to a true non-resident) by virtue of your spouse living in Canada.<hr height="1" noshade id="quote"></blockquote id="quote">

The emmigrant guide, as well as the non-resident, and resident abraod guides, indicate pretty clearly how one must report their WORLD income to CRA, and then deduct the income sourced in the treaty country.

You will pay NR tax on you Cdn interest, etc, just like a non-resident, and no Cdn tax on your US income.

nelsona non grata... and non pro

nelsona · Post by **nelsona** » Fri Apr 22, 2005 6:54 am

There is no way you would qualify to Child credit, since if you were a resident, you would report world income (thus too high), if you were a deemed resident, you would report world income (thus too high), if you were a deemed non-resident, your net income (before deducting your US-source income) would be too high. If you were non-resident, you would simply not qualify.

As to straddling the fence, keeping sufficient res ties to be resident in Canada, this was a very common practice in the '90s, done mainly to avoid deemed dispostion, and lead to the 1997 creation of the deemed non-resident status, by which CCRA would literally push you out the country, triggering deemed dispo, but still retaining taxation rights on 3rd-country income.

Up until 2002 however, the exact regs related to DNR status were unclear, so it was always better to sever as much as possible to get true NR status. Now that DNR regs are quite clear, if I were moving today, I would do NOTHING in haste to sever Cdn ties (except bring family) and rely on my foreign tax status to gain DNR status.

No hurry to cancel OHIP, DL, even to sell my furnished house (now becoming my Cdn 'cottage'), I'd leave a car behind, etc.

nelsona non grata... and non pro