Canadian in US on J-1: am I still a Canadian tax resident?

ktgr8 · Post by **ktgr8** » Tue Nov 13, 2012 6:46 pm

I am a Canadian living in the US with J-1 status. I have now been in the US for two calendar years, so I am considered a US resident alien for tax purposes for 2012. I am wondering if/how this affects my residency status in Canada. I do not have property in Canada, but I do have bank accounts, family, and the intent to return when my J-1 status expires.

In 2010 and 2011, I was considered a US non-resident and Canadian resident for tax purposes and I have filed tax returns in both countries. What will be my status, and what returns will I file, in 2012?

Thanks for your help.

nelsona · Post by **nelsona** » Tue Nov 13, 2012 11:06 pm

Once your days in US could be used toeards SPT, you can then be considered CDn tax resident, assuming you have more ties in US than Canada. Until then, you cannot.

So, you should file a departure return for canada, and either a dual status or full 1040 for US, based on the date on which your J-1 days began counting towards SPT.

ktgr8 · Post by **ktgr8** » Thu Nov 15, 2012 10:58 am

Thanks for your quick reply.

Just to clarify, I intend to return to Canada in <2 years from now. My J-1 is from Nov 2010 to Oct 2014 and I have no plans to immigrate to the US. I guess I'm confused as to whether I am *obliged* to sever tax ties to Canada with a "departure return" once I become a US tax resident. Can I be a tax resident of both countries at once? In my opinion, I still have significant ties to Canada and I don't have a problem filing returns in both countries since my tax rate is more or less identical in my income bracket.

nelsona · Post by **nelsona** » Thu Nov 15, 2012 11:23 am

Technically you cannot be a tax resident of both countries, unless you are a US citizen living in canada, and the treaty has specific handling for that situation only, not for the other way around.

You have severed ties, thus you are considered by Canada as a non-resident. CRA is agressive on this issue for deemed dipsosition purposes. The only way you would still be Cdn resident is if you had a full-fledged, year-'round dwelling in Canada and lived in temp housing in US, which is not your case apparently.

The >2 year requirement was done away with years ago.

There can be problems pretending to live in both countries, as your foreign tax credits could be denied by CRA for some types of income, problems with GST/CCTB credits, and CPP issues, thus I never advise this.