Emigrant return T1161 & T1243

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mm77mm77
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Re: Emigrant return T1161 & T1243

Post by mm77mm77 » Sun May 24, 2020 12:24 am

Yes, I read Rev Proc 10-19 but it seems very general ...
Does the below paragraph mean that as long as deemed disposition happened in 2019 (my first US taxable year) it doesn't matter that my date of departure from Canada (June 30th) is after the date I became resident in US (Jan 1st)?
I guess I just don't understand how these 2 dates can be different... :(
Does it mean that even though I became US resident on Jan 1st, I still remained Canadian resident until expiry of my F1 status (So, I was a dual resident)?
I just want to make sure having these 2 different dates won't cause me any problems with the IRS in the future. I don't want to be audited or penalized.

"(3) The individual must make the election by reporting the deemed disposition on the
individual’s timely filed U.S. federal income tax return for the individual’s first taxable
year ending after the individual’s change of residence and attaching a Form 8833,
Treaty Based Return Position Disclosure under section 6114 or 7701(b) of the Internal
Revenue Code, stating that the individual is making an election to pay U.S. federal
income tax on a deemed disposition of property pursuant to new Article XIII(7). The
individual must attach documentation establishing the fair market value of the property,
as determined under Canada’s deemed disposition rules, and confirming that gain
(and, if permitted by section 4.05 of this revenue procedure, loss) was recognized and
properly reported for Canadian tax purposes for the taxable year of the deemed
disposition. "

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Sun May 24, 2020 7:58 am

Because your dates overlap, you are essentially treated like a US citizen at the time you moved to US, just like any other US citizen living in Canada and then moving.

So follow the section (.01) for US citizens. The introductory paragraphs to the RP discuss this as well.
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mm77mm77
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Re: Emigrant return T1161 & T1243

Post by mm77mm77 » Thu May 28, 2020 3:37 pm

I've been thinking and reading about Canadian residency a lot these past couple days... I have a last follow up question, please.

If, as you mention, I don't become Canadian non-resident on Jan 1st just because I am considered US resident for tax purposes on this day. Wouldn't I actually become non-resident of Canada on the day that I have received my Green Card in December and became a permanent resident of US? Since this this is the day I have officially "moved to United States" ?
And not on the day that my F1 status ended in June?
Given that if my petition for GC was declined for some reason I would have to move back to Canada.
Thank you Nelsona!

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Thu May 28, 2020 5:11 pm

The reason that you did not become a tax resident of US until June is because of the special tax treatment of f1 status, which exempts days spent in US from being counted towards SPT. Even tourists do not get that exemption, which prevented you from becoming tx resident YEARS ago (since you lived in US for years, but were SPT-exempt). So even if you had not gotten GC, you would be resident from June onward. You could still have elected to file full-year, just like you are doing now, married or not, GC or not, by treaty. Your marriage marely allowed you to make the election to file full year by IRS regulations, instead of by treaty.

Your departure date in Canada was being held up by your F1 status (which jive with CRA's definition of a deemed resident (student). Once that was gone, and you continued to live in US (as you already said you did), you could now meet the treaty definition of US resident and Cdn non-resident.
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mm77mm77
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Re: Emigrant return T1161 & T1243

Post by mm77mm77 » Thu May 28, 2020 7:00 pm

Ok, but in this case my exempt days in US ended on Dec 31, 2018 even though my F1 status was still valid until June 30th, 2019. Because my 5 calendar exempt years (2014 -2018) were up and I needed to start calculating days present in US starting on Jan 1st, 2019 and hence became US resident as of Jan 1st 2019.
Please see this IRS Aliens Residency Example below which is very similar to my case.
Does this mean that I am non-resident of Canada as of Jan 1st, then after all? That's why I was so confused ...

Example 1
W was a citizen and resident of a foreign country immediately prior to his entry into the United States. He is temporarily present in the United States as a graduate student at a university on an F-1 visa (student visa). He had never been in the United States before his arrival on 08-15-2014. Assuming W substantially complies with the requirements of his visa, does not change his immigration status, and remains in the United States throughout 2019, determine his residency starting date.

Solution:
Date of entry into United States: 08-15-2014
Student F-1 visa
Exempt individual for 5 calendar years (2014 through 2018)
To determine whether W meets the substantial presence test (183 days), begin counting days on 01-01-2019.
Number of nonexempt days in United States during 2019: 366 days

Count days as follows:
Current year (2019) days in United States (366) × 1 = 366 days
Prior year (2018) days in United States (0) × 1/3 = 0 days
Year before that (2017) days in United States (0) × 1/6 = 0 days
Total = 366 days

W meets the substantial presence test on 07-01-2019 (the 183rd day of 2019).
W's residency starting date under IRC § 7701(b) is 01-01-2019 (the first day he was present in United States during the calendar year in which he met the substantial presence test).

https://www.irs.gov/individuals/interna ... y-examples

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Fri May 29, 2020 8:56 am

so, you need to present all information when you originally post. You said you were choosing jan 1 because of marriage and GC, when apparently you knew IRS rules made it Jan 1. I am familiar with the 5-year F1 rule, so were you, so why did you not mention it?

Anyway, the point i was wanting you (and others that read posts) is that you need to determine bith tax filing situations independently in many cases.

We're done.
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nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Fri May 29, 2020 8:56 am

so, you need to present all information when you originally post. You said you were choosing jan 1 because of marriage and GC, when apparently you knew IRS rules made it Jan 1. I am familiar with the 5-year F1 rule, so were you, so why did you not mention it?

Anyway, the point i was wanting you (and others that read posts) is that you need to determine bith tax filing situations independently in many cases.

We're done.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Fri May 29, 2020 8:57 am

btw, that still makes your departure date from Canada dec 31, 2018.
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mm77mm77
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Re: Emigrant return T1161 & T1243

Post by mm77mm77 » Fri May 29, 2020 1:43 pm

I did mention it from the beginning that Jan 1st is the date I became US resident and provided the IRS Aliens residency example to explain why. We had a bit of a misunderstanding, I guess.
Thank you for your help.

nelsona
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Re: Emigrant return T1161 & T1243

Post by nelsona » Sun May 31, 2020 8:08 am

You're right. I had taken your referring to GC and marriage as to meaning you were electing Jan 01. All you need to do now is amend your 2018 Cdn return.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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