Canadian Living in US under TN Visa---Help with tax needed

nmahini · Post by **nmahini** » Fri Mar 13, 2009 3:54 pm

Hello everyone,

I'm a Canadian Citizen living in US under TN visa.
I came to the US on April 2008. Prior to that I worked for a company in Canada and I have received a T4 from that company. I also have my W2 from the company which I work for in the US.

Given that I lived and worked in the US more than 183 days, I believe that I'm considered a US resident for tax purposes and I should file a 1040 in the US.

Here're my questions:

1. should I also mention my canadian income on my 1040?
2. For Canadian tax purposes, should I also mention my US income and US taxes paid?

I already tried using quicktax software, with this info:

none canadian resident
worked in a foreign country

the result was that I had to pay ~7000(plus 1800 which has already been deducted from my canadian pay checks and 3000 which has been deducted from my US paychecks) to canada on an income of 14K in canada and about 40K in the US.

Can somebody explain the steps in quicktax for correct results?

I appreciate your help

nelsona · Post by **nelsona** » Fri Mar 13, 2009 5:01 pm

If you file a 1040, by definition you MUST report world income for entire year.

You are a departing resident for Canada and should follow the directions in the Emigrants guide from CRA. You should not have to report us income as it was earned after departure.

nmahini · Post by **nmahini** » Fri Mar 13, 2009 5:20 pm

nelsona,

thanks for your response.
Should I announce my departure from canada to canadian officials? is this something which requires a form to fillout??

nmahini · Post by **nmahini** » Fri Mar 13, 2009 5:24 pm

also, correct me if I'm wrong, under TN visa, isn't it true that I'm under a tax treaty?? how does this workout?

nelsona · Post by **nelsona** » Sat Mar 14, 2009 7:00 am

You declare your departure when you submit your departure return. Read the Emigrant guide from CRA, but do NOT submit the NR73 form, merely use it as aguideline to know what they consider resisential ties.

You need to be more specific about what your treaty concerns are.

peters · Post by **peters** » Mon Mar 23, 2009 11:30 pm

Hi: I have a similar question. We arrive with my wife later in the year (Sept 2008). We would qualify for Substantial present test in March 2009. Can we file dual tax return for 2008 i.e. 1040NR for beginning of the year ($0 income) and 1040 married filing jointly for the rest of the year. Somebody told me that we could prorate standard deduction for the period of September 2008 to Dec 2008. I read the 519 publication and that doesn't seem to be true I only found that in a dual tax year one has to file married filing separately.

peters · Post by **peters** » Tue Mar 24, 2009 12:03 am

The reason I am asking about filing as MFJ because it seem to make quite a difference in the tax. I made in the US about 50k and my wife 7k. On this income i calculated with 1040 MFJ and a standard deduction fed tax about 3500 while with 1040NR MFS it was almost double the amount. That seems quite a difference. Is there any way to take an advantage of this deductions while first year in the US?

nelsona · Post by **nelsona** » Tue Mar 24, 2009 5:23 am

The only way to file MFJ for 2008 is to file a FULL YEAR 1040 reporting ALL world income jointly. You then can use any of the foreign income exclusions or tax credits to lower your US tax on your Cdn income that you report.

peters · Post by **peters** » Tue Mar 24, 2009 8:11 am

If we want to file 1040 MFJ do I need to file any other form to show that this is my first year and I am making an election to file for the whole year? Prior to coming to us my can. income was 30k which is below the exlusion limit of 80k.

nelsona · Post by **nelsona** » Tue Mar 24, 2009 8:40 am

Your exclusion will be prorated.

peters · Post by **peters** » Tue Mar 24, 2009 8:55 am

Now I am more confused then before. :)
Even if we file 1040 MFJ we have to calculate/prorate standard deductions, foreign income exclusion to 4 months present in the US? In which IRS publication I could find this outlined?

nelsona · Post by **nelsona** » Tue Mar 24, 2009 9:20 am

Only the exclusion limit will be prorated. All other items are full.

The limit comes from the 330 day period required to satisfy PPT. Your period of PPT qualification will not be the full year, this prorated.

jgoveas · Post by **jgoveas** » Wed Mar 25, 2009 12:09 pm

Actually Nelsona, would you mind answering peter's question about whether we have to fill out a statement saying we are making the election to file as 1040 residents for the full year as I am also unsure about the necessity of a statement.

Thanks!

nelsona · Post by **nelsona** » Wed Mar 25, 2009 12:15 pm

You can file 8833 referring to Article XXV.

jgoveas · Post by **jgoveas** » Wed Mar 25, 2009 2:10 pm

Hi Nelsona,

I thought 8833 was if we wanted to claim tax treaty benefits for not filing etc. But since Peter and I seem to want to file for the whole year AS US residents, we wouldn't fill this right? I think he (and I) are asking if we need to submit a statement saying yes, we arrived half way during the year but we're electing to file as residents for the entire year) or do we just fill form 1040 with world income and it's understood?

Thanks!

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