Canadian TN Holder - Moved to USA - 2007 Taxes

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bsheedy
Posts: 13
Joined: Wed Feb 14, 2007 10:05 pm

Canadian TN Holder - Moved to USA - 2007 Taxes

Post by bsheedy »

Hello,

I am a Canadian Citizen who has held a TN Visa for the past 2 years, and was asked to work and live in the US as of July 2007. My wife has been granted a TD visa, and has not worked for the mast 1.5 years.

2007 Work History:

- Worked Full Time for Altiris, Inc USA from Jan 1 - April 7, 2007
- Resided in Canada during this time
- Worked solely in the USA - No Canadian Assignments
- Was paid by Symantec USA in US Dollars
- Expecting a W2 from Altiris for this Period
- Wife did not work during this period

- Altiris Inc USA, was aquired by Symantec USA
- Was Asked to join Symantec CAN for simplification

- Worked Full Time for Symantec CAN from April 7 - July 9, 2007
- Resided in Canada during this time
- Worked solely in the USA - No Canadian Assignments
- Was paid by Symantec CAN in Canadian Dollars
- Expecting a T4 from Symantec CAN for this Period
- Wife did not work during this period

- Currently working Full Time for Symantec USA from July 9 - Dec 31, 2007
- Sold Home in Canada July 2, 2007
- My Wife and I Moved to USA July 9, 2007
- Bought Home in Houston ,TX
- Wife did not work during this period (TD Restriction)
- being paid by Symantec USA in US Dollars
- Expecting a W2 from Symantec USA for this Period

Question 1: How should we file in Canada and USA for 2007 taxation year?

My thoughts are as follows:

a) Canada - Complete a Joint T1 General form claiming my Symantec CAN T4 and Altiris USA W2 (Income from Jan 1 - July 9, 2007.)

b) USA - Complete 1040 (or 1040NR?) Form claiming final Canadian T1 outcome as Foreign Tax Credit and the Symantec USA W2 from July 9 - Dec 31, 2007

please correct me if I am wrong...

Question 2: Do I have to report the proceeds from sale of my home on my Canadian Taxes if I sold it before I left?

Question 3: Should we file our US Taxes jointly or single?

Question 4: Will my wife need a Tax Identification Number (As she can not get a US SSN as she is a TD Visa Holder)?

Any help would be greatly appreciated.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

For US the solution is simple. You will file a normal 1040, reprting all your world in come for the entire year. All of your wages are US sourced.

For canada, you will report all your world income until the day you moved to US, July 9. Follw the einstructions in the Emigrants guide for CRA.

Your relief for double taxation will come on the Cdn tax return, when you apportion your final US tax against the US wages you report on your T1.

Your house is a non-event taxwise in both countries.

Now, you have not told me about any other income you had., like souses wages, interst, deemed disposition upon leaving canada, etc. if you have other Cdn income earned after leaving, or other US income earned before leaving canada, you may have some tax relief of these returns.

After all is done, you can most likely take a deduction (but not a credit) for any Cdn tax you paid that was not refunded.

You will likely find joint filing best. she will be issued ITIN after you file her return.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bsheedy
Posts: 13
Joined: Wed Feb 14, 2007 10:05 pm

Post by bsheedy »

Thanks!

- My wife had no income for 2007
- I had no further income from any sources
- I did not cash out any RRSP's or Investments

By "Your relief for double taxation will come on the Cdn tax return, when you apportion your final US tax against the US wages you report on your T1." - are you saying that the releif comes from the tax paid on US Wages from the Altiris USA W2 from Jan1 to April 7, 2007 - correct?


Thanks again.
Brian Sheedy
nelsona
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Location: Nowhere, man

Post by nelsona »

No. You cannot determine the US tax on that portion of your income until you do your tax return.

If you end up with 50K wages and report 25K in canada, then half of your overall taxes paid (as determined on your 1040, not your W2) will be eligible for use on your Cdn return. This will include fed/state/FICA.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Post by nelsona »

... and the US portion will include your wages from April to July.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bsheedy
Posts: 13
Joined: Wed Feb 14, 2007 10:05 pm

Post by bsheedy »

Ok, I think I understand.

So, I will do my US Taxes first, then Canadian?
Brian Sheedy
nelsona
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Post by nelsona »

There is a prescribed order: US first, without taking into account any foreign tax. Then use these results to complete your Cdn return. Then adjust your US return ONCE based on the Cdn result.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Carson
Posts: 182
Joined: Wed Oct 27, 2004 1:00 pm
Location: Toronto

Post by Carson »

[quote="nelsona"]There is a prescribed order: US first, without taking into account any foreign tax. Then use these results to complete your Cdn return. Then adjust your US return ONCE based on the Cdn result.[/quote]

Nelson, sorry to hijack, but I found it interesting that you mentioned this Treaty mandated ordering rule. Perhaps you could tell CRA! It's been a very frustrating year for 8 of our US citizen, Canadian resident clients, as CRA decided to review the FTC claimed on their T1 returns. In each case, they have reassessed the taxpayer because we used the "wrong" US tax figure.

They claim we should use the US tax after the US FTC, i.e. in 2006, it would be line 63, instead of line 46.

We have responded by referring to CRA Memo 9826226 - Taxation of United States citizens resident in Canada, dated October 19, 1998, in which CRA provided their latest guidance based on the Treaty as to the ordering rule.

We have not yet heard back from anyone, but it sure sounds like an internal training issue.
bsheedy
Posts: 13
Joined: Wed Feb 14, 2007 10:05 pm

Post by bsheedy »

I have finally received my two W2's and one T4.

I am filing a 1040 and claiming all of my income.

Where do I fill in the T4 information?

It is certainly not easy.

Thanks.
Brian Sheedy
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Post by nelsona »

You report Cdn income in the same places you would if it was US income, wages are wages, interest is interest, etc.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bsheedy
Posts: 13
Joined: Wed Feb 14, 2007 10:05 pm

Post by bsheedy »

So, I enter my wages into the same place I enter the W2?

Should I convert it to USD first using the average conversion rate for that period?

Thanks.
Brian Sheedy
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Of course you should convert. IRS is only interested in US dollars.

Any income or expenses you had on a periodic basis, should be converted using an average exchange rate.

If you had one time items, like buys or sells of investmets, these transactions should use the conversion in effect on that specific date.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bsheedy
Posts: 13
Joined: Wed Feb 14, 2007 10:05 pm

Post by bsheedy »

So, If I am entering my converted T4 wages into the W2 fields on my 1040, I can enter:

T4 Box 14 - Employment Income INTO W2 Box 1 - Wages
T4 Box 22 - Income Tax Deducted INTO W2 Box - 2 Federal Tax W/H

Am I able to claim CPP and EI contributions?

Is this all I need to do to report my Canadian T4 Income on a 1040?

Much Appreciated.
Brian Sheedy
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Don't get too hung up on the software.

Nothing on the T4 'fits' into a W-2. You need to put them directly in the 1040 where they go.

So the wage amount goes on line 7. Don't create a fake W-2 for this as this will mess up other things like your Social security amount, etc.

your income tax deducted is NOT IRS tax, so it doesn't go anywhere 1040. First you need to actaully fill out your Cdn departure return, and THEN you can use the calculated tax on your Form 1116 as a foreign tax credit, along with your EI and CPP.

I get the feeling you think your US and Cdn returns are going to be as simple as just pludgging numbers in. It won't.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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