US Resident worked in Canada on work permit, entered and left in same year

[sunstate]

Hello Nelsona

Could you pl help me with this situation.

I am US resident (H1b visa holder) under substantial presence days test. I worked in Canada on work permit from Feb to Oct (close to 200 days).

Income in US:

- Rental income for full year
- W-2 US residency period
- Stock sales (I bought and sold stock throughout the year)
- Dividend and interest income

Income in Canada:

- T4 for time I worked in Canada
- Dividend, Interest and Stock sales

Questions:
1) will I be filing full year resident return in US
2) I believe if I need to file as full year resident in US, need report Canadian income including dividend, interest and capital gain...and claim foreign tax credit?
3) will I be filing as resident in Canada
4) will I need to report US income (rent, capital gain, dividend, interest) on canada return?
5) I guess, I dont need to pay departure tax in canada since stayed just under one year, correct?

Thank you so much for your help.

[nelsona]

What was your living arrangements in Canada and US during the period you worked in Canada?

[sunstate]

Thanks for checking my query.

Canada: I was living in rented apartment, vacated the same when moved to US. Ended all my tie ups with Canada.

US: I was living in a rented apartment in California which I vacated when moved to Canada in Feb 2021. Due to some technical issue with my H1b status, my company moved me to Canada on work permit. As the visa issue got fixed, I moved back to US in Oct 2021 and bought a home here in California in Dec 2021.

Also I own a condo in NJ that has been rented continuously since Jan 2018.

Appreciate your help.!

[nelsona]

So, you will need to file a CDn tax return for 2021, with BOTH an arrival and departure date.

It will include the wages earned while in Canada, as well as any other income earned between the two dates.

to answer your questions.

1. You probably should file as resident in US 1040 full year, taking credit for the CDn taxes you determone on your Cdn return
2. yes
3. yes. see above
4. yes
5. you will not need to pay departure tax, except for investments you bought while in Canada. Those you held before arrival (and did not sell) are exempt, This you sold while in Canada are subject to cap gains, with cost basis determined on arrival in canada.

[sunstate]

Thank you very much for your help, greatly appreciate..!

Best Wishes..!

[sunstate]

Hi Nelsona

I prepared my US return and have below items:

1) Capital gains of $75000 for entire year: do i split this into US and Canadian residency period and source Canadian period income to Canada return? Then claim taxes paid in Canada on US return as foreign credit?
2) I have rental loss of $500 (after reducing expenses and depreciation) which I am not able to use due my AGI. Do the same treatment as per 1) above?
3) Which section in my 1040 do I inform IRS that i did above treatments per the treaty? Do I fill any additional form?

Thanks again for help

[sunstate]

also to add to 1) above that $75000 of gain is after offsetting my $25k of capital loss that i used from 2020. Not sure if that will have any impact on how much can i report in Canada.

[sunstate]

Hi Nelsona

Posting my query again if you can pl help.

I prepared my US return and have below items:

1) Capital gains of $75000 for entire year: do i split this into US and Canadian residency period and source Canadian period income to Canada return? Then claim taxes paid in Canada on US return as foreign credit? Also capital gains are after $25k of capital loss that i used from 2020. Not sure if that will have any impact on how much can i report in Canada.
2) I have rental loss of $500 (after reducing expenses and depreciation) which I am not able to use due my AGI. Do the same treatment as per 1) above?
3) Which section in my 1040 do I inform IRS that i did above treatments per the treaty? Do I fill any additional form?

Thanks again for help

[nelsona]

Since you have rental loss, there is nothing about your time in canada affects this on your US return.

The gains you made in canada are foreign passive on your US 1116. Previous losses are not reported in canada.

I'm out at this point.