hello Nelsona..First off thanks for all the valuable information you've been providing us in regards to CAN/US Taxation matters, it has been extremely valuable for people like myself and its very much appreciated. I've been browsing the forum for the past few days and feel i have gained good understanding of what's required in my case but would like to verify my understanding and clarify a few items.
1./ I've worked until oct28,2011 at a canadian company and moving to US on Nov 24th on a TN to start working for a US employer. Based on this, i don't meet the SPT requirements and will therefore be required to submit 1040NR?
2./ In order to file Married - file Jointly, could i get an ITIN for my wife in advance and file jointly as an NR or is the only way to file is via the section XXV 1040NR and claiming 3 deductions (myself, wife and son) per the W4 alongwith the respective ITIN's for both my son and wife on TD visa?
3./ I have approx 35k in the RRSP funds currently. when i move to the US, i plan to collapse the rrsp funds in Jan, 2012 by paying a withholding of 25% to the CRA. This event will not result in a US tax penalty based on timing of collapse and my move correct? Also, will i be able to claim a tax benefit on the 25% paid at withdrawal either in US or Canada.
4./ I had taken out some funds from my RRSP under HBP plan. My US employer is willing to place me in a temp housing until feb 2012. This means i could show the HBP money as income for 2012 Canadian TAX submission to reduce the Tax bracket. would this have an impact because of 2 above?
5./ I'll be leaving One Canadian Bank Account and a Canadian Credit Card intact for times when i'm visiting Canada. Total worth of my CAD posession is around 25k. I'll need to submit the TD F 90-22.1 for the CAD accounts correct?
6./ I'm planning to sell my Canadian home in September, 2012. Would i need to pay US and/or Canadian Tax on the returns and/or how long do i have to not worry about paying taxes in either country for my home sale?
Thanks in advance
regards,
US/CAN Tax Query and Verification
Moderator: Mark T Serbinski CA CPA
1. You can file 1040NR, but you can also either file dual-statsu, or full year 1040.
2. See 1, tha twould be one of the options above. You would not get ITIN prior to filing (and you will need ITIN regrdless if you file 1004 or 1040NR (since you can claim spouse on 1040NR)
3. You will only need to pay US tax on the income generated in your RRSP from now until you collapse (which will be minimal, but is unlikly to be zero, espaecially if you file 2011 1040).
You will not be able to claim the 25% as a credit on your US return, but you will be able to use the 25% as deduction on your 1040 (schedule A).
You will not bale to have it both ways: you will ahve left US in Novenber and are non-resident from that day. In any event, since you will not have time in Canada for 2011, the HBP will be taxed in a relatively high bracket since you will not have persaonl deduction for 2011. And if you do this, you might have trouble saying that your RRSP should be withdrawn as non-resident in januarty, if you are pretending to live in canada until february.
5. Yes.
6. You have 1 year from departure date to sell home in canada to avoid any Cdn tax.
2. See 1, tha twould be one of the options above. You would not get ITIN prior to filing (and you will need ITIN regrdless if you file 1004 or 1040NR (since you can claim spouse on 1040NR)
3. You will only need to pay US tax on the income generated in your RRSP from now until you collapse (which will be minimal, but is unlikly to be zero, espaecially if you file 2011 1040).
You will not be able to claim the 25% as a credit on your US return, but you will be able to use the 25% as deduction on your 1040 (schedule A).
You will not bale to have it both ways: you will ahve left US in Novenber and are non-resident from that day. In any event, since you will not have time in Canada for 2011, the HBP will be taxed in a relatively high bracket since you will not have persaonl deduction for 2011. And if you do this, you might have trouble saying that your RRSP should be withdrawn as non-resident in januarty, if you are pretending to live in canada until february.
5. Yes.
6. You have 1 year from departure date to sell home in canada to avoid any Cdn tax.
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
Thanks Nelsona for the prompt reply. some additional questions based on your response.
1./ What would you suggest is the best option out of 1040NR, Dual-Status or full year 1040 considering I'm looking to claim my wife and child as deductions/allowances per the W4 I'd be filling out at my new Job and the fact that i haven't met the SPT requirement.
3./ My understanding (based on the previous posts) of the HBP policy was that if the employer could temporarily place me in a housing they've organized taking me into 2012 that i could defer the HBP until 2013 and show it as income for 2012 CDN return to reduce the tax penalty. Is it that this doesn't apply in my case since i'm looking to collapse the rrsp in Jan,2012 but looking to show the HBP as income on 2012 tax return?. If yes, i could defer move the RRSP to a self-directed account until much later and look to collapse it in say Sept,2013?
Also, i couldn't decipher your statement regarding not having personal deduction for 2011. Please elaborate
Much Appreciate the help.
1./ What would you suggest is the best option out of 1040NR, Dual-Status or full year 1040 considering I'm looking to claim my wife and child as deductions/allowances per the W4 I'd be filling out at my new Job and the fact that i haven't met the SPT requirement.
3./ My understanding (based on the previous posts) of the HBP policy was that if the employer could temporarily place me in a housing they've organized taking me into 2012 that i could defer the HBP until 2013 and show it as income for 2012 CDN return to reduce the tax penalty. Is it that this doesn't apply in my case since i'm looking to collapse the rrsp in Jan,2012 but looking to show the HBP as income on 2012 tax return?. If yes, i could defer move the RRSP to a self-directed account until much later and look to collapse it in say Sept,2013?
Also, i couldn't decipher your statement regarding not having personal deduction for 2011. Please elaborate
Much Appreciate the help.
1. I wouldn't worry about W-4 for this year. Just use single. Fix it next year, when it will matter more.
3. This has nothing to do with HBP. Do you have a home in canada that you can live in after November? If yes, then you can decide to be resident of canada until you move into a residence in US. IF you do not have ahome in canada after november, it desn't matter what type of housing you live in in US, you are resident there from november.
And you seem to be missing the other 2 points. If you work things to officiall leave canada in Jan/feb of 2012, then you will get very little persoanl deduction on your 2012 departure return, this your HBP will be taxed at regular rates, and you will ahve to wait to take your RRSP collapse until after that date too.
3. This has nothing to do with HBP. Do you have a home in canada that you can live in after November? If yes, then you can decide to be resident of canada until you move into a residence in US. IF you do not have ahome in canada after november, it desn't matter what type of housing you live in in US, you are resident there from november.
And you seem to be missing the other 2 points. If you work things to officiall leave canada in Jan/feb of 2012, then you will get very little persoanl deduction on your 2012 departure return, this your HBP will be taxed at regular rates, and you will ahve to wait to take your RRSP collapse until after that date too.
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
CC owes you.
Btw, on the original poster. remember that the longer you delay non-residndence, you are also req'd to report US wages on Cdn return.
Btw, on the original poster. remember that the longer you delay non-residndence, you are also req'd to report US wages on Cdn return.
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