Dear all, my situation is as below:
1. I started my job in US on Jan. 9 2008, I'm holding a H1b (changed from a TN in Oct.).
2. My wife started her job in US in September on a TN.
3. I rented an apartment from January to April in US, My wife and our kids moved over after we sold our house in Canada on Apr.8 (closing date). We bought a house in US on Apr. 17 (closing date).
4. I received some income (vacation pay from my previous company in Canada) in 2008, so did my wife. PLUS my wife received 3 month EI from Canadian goverment after she moved to US.
My questions are:
1. Since my family moved to US on April 17, they became US residents on the same date. How about myself? Should I report my US income between January and April to Canadian goverment?
2. Should we include my wife's Canadian EI when we file our US tax return? where on 1040 form should we put if the answer is Yes. and because 20% of her EI has been withheld, we on 1040 form can we take the credit?
3. What is the sequence to file our tax returns, US first or Canada first, or doesn't matter?
Many thanks !
First US tax returen
Moderator: Mark T Serbinski CA CPA
From your post, I would say that you and your spouse have different departure dates: yous in january and hers in April. That would make your US income not reportable.
Your wife EI is reportable in US. In canada she was laible for a flat 25% tax on EI (was this not done correctly? Had she not advised them of her non-residency?) In any event she will be reporting the EI on her Cdn return as well. If her marginal tax rate in canad was more than 25%, we can discuss how to get some extar tax back (section 217 return) although this does not appear to be necessary.
Your joint 1040 will report all your income from US and canada (hers and yours). You will then take foreign tax credits on the US return for the Cdn tax you finlly owed on your departure returns.
The sequence of filing is unimportant. However, since your Cdn departure returns wil not have any US tax to be credited (ie. it will only be reporting Cdn sourced income), it would make sense to complete these first, so that you will have a concrete number to use on your Forms 1116 on your 1040.
For the purposes of form 1116, the Cdn tax you can use is the Fed income tax, any provincail taxes, and CPP and EI premiums paid.
One caveat: since you will be claiming that you were non-resident in January, there is a slight possibility that they will say that your house sale was made while non-resident, which means having to submit an extra form or two. I would not worry about this at this point however.
The main things that CRA can come back at you for is not having cancelled your child benefits whwne they left canada. Since it appears that your spouse did not advise EI that she had left the country, I suspect that CCTB was not advised either. Be prepared to pay back the child benefits that were received after april, if any.
On EI: Typically spouse moving to US on TD are not eligible for EI, since they are not immedately eligible for work. Plus, you are generally not entitled to EI when outside canada.
http://www.hrsdc.gc.ca/eng/ei/types/reg ... l#eligible
"Under most circumstances you are not allowed to receive regular benefits for any period in which you are not in Canada."
There are provisions to remain eligible. She would have discussed these with HRSDC before leaving.
If you move to canada, to maintain EI you need to show proof of work:
http://www.hrsdc.gc.ca/eng/ei/informati ... nada.shtml
"You must also provide proof that you are legally authorized to work in the United States. "
Even if your wife was eligible to work, her TD (or H4) status is insufficient proof.
I sure hope that she just didn't collect the EI with a Cdn address...
http://www.hrsdc.gc.ca/eng/ei/types/reg ... l#eligible
Your wife EI is reportable in US. In canada she was laible for a flat 25% tax on EI (was this not done correctly? Had she not advised them of her non-residency?) In any event she will be reporting the EI on her Cdn return as well. If her marginal tax rate in canad was more than 25%, we can discuss how to get some extar tax back (section 217 return) although this does not appear to be necessary.
Your joint 1040 will report all your income from US and canada (hers and yours). You will then take foreign tax credits on the US return for the Cdn tax you finlly owed on your departure returns.
The sequence of filing is unimportant. However, since your Cdn departure returns wil not have any US tax to be credited (ie. it will only be reporting Cdn sourced income), it would make sense to complete these first, so that you will have a concrete number to use on your Forms 1116 on your 1040.
For the purposes of form 1116, the Cdn tax you can use is the Fed income tax, any provincail taxes, and CPP and EI premiums paid.
One caveat: since you will be claiming that you were non-resident in January, there is a slight possibility that they will say that your house sale was made while non-resident, which means having to submit an extra form or two. I would not worry about this at this point however.
The main things that CRA can come back at you for is not having cancelled your child benefits whwne they left canada. Since it appears that your spouse did not advise EI that she had left the country, I suspect that CCTB was not advised either. Be prepared to pay back the child benefits that were received after april, if any.
On EI: Typically spouse moving to US on TD are not eligible for EI, since they are not immedately eligible for work. Plus, you are generally not entitled to EI when outside canada.
http://www.hrsdc.gc.ca/eng/ei/types/reg ... l#eligible
"Under most circumstances you are not allowed to receive regular benefits for any period in which you are not in Canada."
There are provisions to remain eligible. She would have discussed these with HRSDC before leaving.
If you move to canada, to maintain EI you need to show proof of work:
http://www.hrsdc.gc.ca/eng/ei/informati ... nada.shtml
"You must also provide proof that you are legally authorized to work in the United States. "
Even if your wife was eligible to work, her TD (or H4) status is insufficient proof.
I sure hope that she just didn't collect the EI with a Cdn address...
http://www.hrsdc.gc.ca/eng/ei/types/reg ... l#eligible
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thank you so much, Nelsona.
From your reply, I'm wondering if I treat myself as a Canadian resident also until April (like every body in my family), will this make our situation less disputable? I'm thinking I have to pay taxes to US federal and state governments anyway for the income I have earned from January to April, and I should be able to take these taxes as credit when I report the income to Canadian government, I guess maybe I will not need to pay a lot money to Canada because we currently live in a high-tax state (NY) as well? The point is I'm kind afraid that I might have to spend tons of time dealing with the government agents, it's not worthwhile if I only need pay a little money back.
We called CRA many times to cancel Our CCTB after we moved to US, everytime we were told "OK", but the checks still kept coming to our US address. We didn't spend the money as we knew we would return them some day. And finally we did return the money as requested in August?!
As for my wife's EI, she didn't apply for it until she moved to US, and she never used a Canadian address. So nothing wrong with this, I guess.
Thank you again for your kind replys
From your reply, I'm wondering if I treat myself as a Canadian resident also until April (like every body in my family), will this make our situation less disputable? I'm thinking I have to pay taxes to US federal and state governments anyway for the income I have earned from January to April, and I should be able to take these taxes as credit when I report the income to Canadian government, I guess maybe I will not need to pay a lot money to Canada because we currently live in a high-tax state (NY) as well? The point is I'm kind afraid that I might have to spend tons of time dealing with the government agents, it's not worthwhile if I only need pay a little money back.
We called CRA many times to cancel Our CCTB after we moved to US, everytime we were told "OK", but the checks still kept coming to our US address. We didn't spend the money as we knew we would return them some day. And finally we did return the money as requested in August?!
As for my wife's EI, she didn't apply for it until she moved to US, and she never used a Canadian address. So nothing wrong with this, I guess.
Thank you again for your kind replys
The problem with including your early-year income is that it makes your taxes pretty difficult to calculate.
I would simply go with what I posted above.
As to cctb and ei, you seem ok. Just hold on to those checks.
I would simply go with what I posted above.
As to cctb and ei, you seem ok. Just hold on to those checks.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
[quote="nelsona"]From your post, I would say that you and your spouse have different departure dates: yous in january and hers in April. That would make your US income not reportable.
Hi, Nelsona, I read the emigrant guide again, I'm not sure if I can have my departure date in January? Because from January to April, my wife and kids still lived in Canada, getting CCTB and UCCB, preparing for selling our house; although I rented a room in the US from January to April, looking to buy our house, but I did visit them a couple of times each month...
As you said, including my US income from January to April to my Canadian tax return is really painful, I just need some solid explaination that I can use January 9 as my departure date, thank you very much, Nelsona !!
http://www.hrsdc.gc.ca/eng/ei/types/reg ... l#eligible[/quote]
Hi, Nelsona, I read the emigrant guide again, I'm not sure if I can have my departure date in January? Because from January to April, my wife and kids still lived in Canada, getting CCTB and UCCB, preparing for selling our house; although I rented a room in the US from January to April, looking to buy our house, but I did visit them a couple of times each month...
As you said, including my US income from January to April to my Canadian tax return is really painful, I just need some solid explaination that I can use January 9 as my departure date, thank you very much, Nelsona !!
http://www.hrsdc.gc.ca/eng/ei/types/reg ... l#eligible[/quote]
You are using the treaty, which would override any CRA rules.
Since you began living in US in jnauary, your centre of viatil intersts would have been in US. I would have preferred that you not visit so often, but there you are.
In any event, you have nothing to lose putting january. If they come back to you, then you can redo your Cdn taxes accordingly.
Since you began living in US in jnauary, your centre of viatil intersts would have been in US. I would have preferred that you not visit so often, but there you are.
In any event, you have nothing to lose putting january. If they come back to you, then you can redo your Cdn taxes accordingly.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best