Canada Departure Return for 1 Day

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stressfulauditor
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Joined: Thu May 05, 2022 5:18 pm

Canada Departure Return for 1 Day

Post by stressfulauditor »

Hello! In need of a bit of advice on my situation, a CPA suggested I do the following but I am not sure if this approach is right - to file a Canadian tax return but put the departure date as Jan 1, 2021 because I didn't file previously.
-2020 Taxes - filed in Canada as a resident, pervious accountant didn't include a departure date
-2021 Taxes - not filed in Canada (my previous accountant said I didn't need to file since I received my h1b in late 2020 and have no ties to canada since end of 2020), however my new CPA said that I need to file 2020 even if it is just for 1 day in canada because (a) received a T5 from my Canadian bank which I reported in my US IRS tax returns and (b) I never stated a departure date in my 2020 taxes however I can exclude any income on that return since I reported the Canadian bank interest already in my US fed/state returns

Please help. thank you
nelsona
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Re: Canada Departure Return for 1 Day

Post by nelsona »

Personally I would correct my 2020 return, to put a legitimate departure date. Did you include your US wages in 2020 on that CDn tax return? I suspect not.
For your new CPA's advice, what "happened" on Jan 01, 2021 that would define you as having departed that day? Also, just for your info, when you file taxes in 2 countries (like in 2020), you can't exclude reporting income in one country simply because you reported it on the other. You need a legit reason. In this case, interest is not reported on a CDn return if you are no longer resident.

So if you reported your US income on your 2020 Cdn return, fixing it may actually get money back, by putting a departure date and excluding the US income.
If you did not report your US income, then you MUST fix the return, to include a departure date, otherwise you have under-reported your income.

So, faking a jan 01, 2021 date is not in your best interest.
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
stressfulauditor
Posts: 9
Joined: Thu May 05, 2022 5:18 pm

Re: Canada Departure Return for 1 Day

Post by stressfulauditor »

For tax year 2020 CANADA tax return: the full US wages were included on the CDN return and it was filed as if I was there for the full year as a resident. For 2020 tax year, IRS/US taxes were filed as a non-resident (1040NR for federal), I was told at that time that I could not have a departure date because my US tax filing was as a non-resident so I had to file Canada taxes the full-year as if I was a resident?

The CPA said to do 1/1/2021 as a 1-day filing instead of amending the 2020 Canada returns because I would need to change my 2020 IRS/US filing from a 1040-NR to a 1040 and I was worried that canada might end up auditing my 2020 returns if I were to try to amend the departure date, creating a lot of hassle.
nelsona
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Re: Canada Departure Return for 1 Day

Post by nelsona »

This is not quite correct. How one files in each country is determined by its own rules.

You legitimately left Canada in 2020, so you have to file a departure return for 2020.
You file a 1040NR for US because by IRS rules, you are not required to file a 1040, since you did not meet SPT>

The two filings do not necessarily have to be compatible. One would only choose to file a 1040NR/1040 dual statius return if there were some doubt as to your true departure from Canada, but this is not your case.

So your two CPAs are wrong: the first one should have filed a departure return, and the second one should not suggest a fake departure date.
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
stressfulauditor
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Re: Canada Departure Return for 1 Day

Post by stressfulauditor »

Thanks Nelson. For the tax return in the departure year aka departure return,, where do I report the world income (or income that I earned while I was in the USA and a Canada non-resdient) because a Schedule A is only for non-resident
nelsona
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Re: Canada Departure Return for 1 Day

Post by nelsona »

Please read the instructions from CA

You attach a note
https://www.canada.ca/en/revenue-agency ... s.html#nrc

This is n=only used to determine hoe much of your credits you will be allowed to claim. Since you were working in US and will not be reporting this incomoe on your return, your personal credits will be prorated, byt this is better than having to pay tax on the US income.
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
stressfulauditor
Posts: 9
Joined: Thu May 05, 2022 5:18 pm

Re: Canada Departure Return for 1 Day

Post by stressfulauditor »

Thank you Nelson! If I am interpreting this correctly then in the departure return for my part-year Canada resident, I would NOT report my world income (aka US employment income that I earned while I was a USA resident) since I didn't earn any income during my time as a Canadian resident and am not claiming any federal tax credits.

If you are claiming full federal non-refundable tax credits, attach a note to your return stating your net world income (in Canadian dollars) for the part of the year that you were not a resident of Canada.
nelsona
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Re: Canada Departure Return for 1 Day

Post by nelsona »

Whether you get credits or not, you NEVER report world income after your departure AS TAXABLE INCOME. You merely STATE your world income after departure in order to determine whether you get full or partial credit.

You will however get partiai credits for the portion of the year you lived in Canada.
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
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