Canadien/Quebec on TN in US since 07/2006

mel0526 · Post by **mel0526** » Wed Nov 28, 2007 11:33 am

I'm from Quebec but I'm living in the US since August 2006 (July 31). For 2006, I fill a 1040NR for US and a full tax report for Canada and Quebec because of more income from Canada...
Now, I worked all 2007 in US and will like to don't do any tax report in Canada at less the Quebec one. I have REER (from other year) that still are at the bank and some placements at the bank also (in Canada). Do I have to close all that to cut all my link with Canada? What else I have to do to make sure that my link for tax report are cut? And I think I will be able to fill 1040 full version this year.

Thanks you,
Melanie

nelsona · Post by **nelsona** » Wed Nov 28, 2007 11:48 am

First off, you were not supposed to file a full year tax return in canada/QC for 2006. You left Canada in 2006, and thus you were supposed to file a departure return. You would report NONE of your US income on these returns. The CRA has an "Emigrants" guide which the same stpes apply to your QC return.

The fact that you ahd more or less income from canada does not matter and is not the criteria for determining how to file your taxes. Where you live is what counts most.

http://www.cra-arc.gc.ca/tax/nonresiden ... ing-f.html

You should go back and fix this, for 2006.

For US, while You were allowed to file 1040NR in US for 2006, it proabaly would have been better to file a 1040, especially if you were married. I would redo my 1040 for 2006 and see if it results in less tax. You would exclude your Cdn wages from before arriving in US, using form 2555.

For 2007, unless you worked in canada during the year it is unlikely that you would need to fila a return at all in canada. You do not need to close your accounts in canada, but you maust advise the firms that you are living in US. Also, any non-RRSP investments you are deemed to have been sold when you lefdt, with tax due. (disposition reputee)

http://www.cra-arc.gc.ca/tax/nonresiden ... ion-f.html

Obviously, you will file a 1040 in US this year since this is where you live, and report all world income, as well as report the existence of your Cdn accounts to IRS, using form 8891 for RRSP.

nelsona · Post by **nelsona** » Wed Nov 28, 2007 11:54 am

http://forums.serbinski.com/viewtopic.p ... ight=#9504

Apparently you did not take my advice ealier this year when you asked about 2006 taxes.

That was not wise.

dhirenasha · Post by **dhirenasha** » Wed Nov 28, 2007 5:10 pm

Nelsona,

Correct me if I m wrong. The green card test in the US says that u have to be atleast 183 days in US to be called as a US resident. i.e to file 1040.

If the above friend left in august 2006, he has less then 183 days in US and hence why should he file 1040 and why not 1040 NR. Assume that he has home and spouse in US living with him...and his RRSP and RESP and other accounts are in Canada.

nelsona · Post by **nelsona** » Wed Nov 28, 2007 5:24 pm

As I explained above "while You were allowed to file 1040NR in US for 2006, it proabaly would have been better to file a 1040, especially if you were married. I would redo my 1040 for 2006 and see if it results in less tax. You would exclude your Cdn wages from before arriving in US, using form 2555. "

And the test you are referring to is the Substantial presence test not the Green card test.

She was allowed to file 1040NR, and I told her just that.

The reason she should have filed 1040 is (a) because she is allowed to by IRS rules (it's called the first-year choice) and, (b) even if she was not allowed, she could by treaty (Article XXV), and because (c) it will result in lower US taxes in ALMOST ALL CASES, and (d) it will buttress any case that CRA might question your intentions to move to US.

dhirenasha · Post by **dhirenasha** » Wed Nov 28, 2007 6:17 pm

With so much of confusion of forms etc. for a first timer like me why dont u publish for canadian citizen working in US on TN (a) list of CCRA forms to be filled ,there significance and (b) IRS forms to be filled and ther significance. Say Candian citizen filling jointly living and having a house in USA. Also having RRSP and RESP accounts and locked RRSP account in ON.

This would solve lot of problems as i can see from the discussions that there are plenty of questions with the above situation....

nelsona · Post by **nelsona** » Wed Nov 28, 2007 6:27 pm

I've found, and this is not my site btw, that publishing 'definitive' answers merely illicits more questions.

Besides, when and if I do start this business, I'd rather you come to me and pay.

The CRA website has sufficient information for emigrants. IRS Pub 517 has sufficient info for first year residents.

nelsona · Post by **nelsona** » Wed Nov 28, 2007 6:28 pm

... and Ithink you will find the sites that do publish 'hard information' do not also answer quaestions.

Here, I answer questions.

nelsona · Post by **nelsona** » Wed Nov 28, 2007 7:40 pm

... and even with the vast information I have produced here, most newcomers say: "All intersting but MY case is different (it usually isn't) and so what should I do."

mel0526 · Post by **mel0526** » Wed Nov 28, 2007 9:11 pm

Thanks you Nelsona for your answer, it helps me.

dhirenasha · Post by **dhirenasha** » Wed Nov 28, 2007 9:35 pm

I dont know whats ur back ground is but I m an engineer and I alwyas think in terms of flowcharts and drawings. U can publish flowcharts if u like but if u dont i appreciate all the help u are providing.....

Would keep u bugging for more questions as this is my first time endeavour for TN....

Bill_S · Post by **Bill_S** » Thu Nov 29, 2007 4:41 pm

[quote="nelsona"]
And the test you are referring to is the Substantial presence test not the Green card test.

She was allowed to file 1040NR, and I told her just that.

The reason she should have filed 1040 is (a) because she is allowed to by IRS rules (it's called the first-year choice) and, (b) even if she was not allowed, she could by treaty (Article XXV), and because (c) it will result in lower US taxes in ALMOST ALL CASES, and (d) it will buttress any case that CRA might question your intentions to move to US.[/quote]

Quite right. That's exactly how I handled my transition year way back when - Substantial Presence coupled with First Year Choice. I moved to the USA in September, so I didn't meet SPT for THAT tax year, but by the time I filed the following April I met SPT for the CURRENT year, and thus could elect First Year Choice to be taxed as a resident for the year of my arrival.

This was in 1993/1994, and looking back, I'm amazed that I figured it out. The Web was just getting past being an experiment, so all I had were the hardcopy IRS guides.