Dual status tax year filiing requirements?

[ss421]

Hi,

I was a resident in the U.S. from 2005 up until May 2008 before I left the U.S. and moved back to Canada. I have been told 2008 is a dual status tax year in the U.S. and I should file a 1040NR dual status return and a 1040 dual status statement. Could someone please clarify the information that should appear on each form?

1. What information should be reported on the 1040NR dual status return? Would I report income, deductibles and capital gains/losses from only U.S. sources between Jan 2008 and Dec 2008?

2. What information should be reported on the 1040 dual status statement? Would I report income, deductibles and capital gains/losses from U.S. and Canadian sources from Jan 2008 to May 2008?

3. Where should I report Canadian rental property income and expenses incurred between Jan 2008 and May 2008? This is considered income and expenses from foreign sources outside the U.S. while I was still a resident in the U.S.

Thank you

[nelsona]

First off, let me point out that, as a resident in 2007, you have the option of filing a plain 1040, just like you did in 2007, and take advantage of all the deductions etc that are on 1040, as well as use the 2555 foreign eraned income exclusion on your Cdn wages.

But, if you decide that you prefer to file part-year, think of it as the reverse of when you moved here. So, for the first part of the year, you report all world income on a 1040, but you do not calulate the tax. Then on the 1040NR, you report all the inocme from 1040 plus any US-soure income from the rest of the year, and then use the 1040NR tab;le to calculate tax.

Most fins filing full-year 1040 and using forsugn credits and foreign exclusion is better.

You report foreign insome the same as you did in 2006 and 2007, and then take credits for foreign tax.