J-1 Returning to Canada mid year - Tax status?

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bandana
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Joined: Sat Jun 25, 2011 9:41 pm

J-1 Returning to Canada mid year - Tax status?

Post by bandana »

I am in "J" status in the US. I was a US resident for tax purposes during the 2012 tax year and filed a 1040. This year, I will be returning to Canada permanently on August 1, 2013. The way I see it, I meet the US substantial presence test for 2013, and should file as a US resident for tax purposes for the full 2013 year. And then I file as a resident of Canada to the CRA as of 2014. Am I correct?

Thanks
nelsona
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Post by nelsona »

J does not qualify for substantial presence test, unless you were in US for a long period. How long were you in US?

Technically, you never left canada for tax purposes, unless you had another status previously.

You probably should be filing a full return in both countries. It is never one or the other.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bandana
Posts: 16
Joined: Sat Jun 25, 2011 9:41 pm

Post by bandana »

To clarify, I was in the US previously in F status. And since I have been "exempt as a teacher, trainee, or student for any part of 2 of the 6 preceding calendar years", I was not an exempt individual for the 2012 tax year. That's why I filed a 1040 in 2012, and a departure return to the CRA for Dec 31, 2011.
nelsona
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Post by nelsona »

Good. So, for 2012, you file a full year 1040, and for canada you file a returning resident return , return date whatever your date was, following the "newcomer" guide from CRA.

As I said, you do not file only in one country in years when you move, you file in BOTH>

It will be intersting to see if CRA accepts that you were nopn-resdient for the period after jan 01, 2012, up until you returned. They (not me) may say that this is too short, and that you wmust file as a resident as if you never left.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
bandana
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Joined: Sat Jun 25, 2011 9:41 pm

Post by bandana »

Thanks, Nelsona.

Should I transfer my investments (which included Canadian stocks/REITs) to a Canadian brokerage on the day I move back to Canada, or keep them in the US until the end of the tax year?

I am also intrigued as to how/why CRA may claim my stay in the US was too short to break residency, when my status was determined per the terms of the tax treaty!
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Just re-reading the thread, I noticed you WILL return in 2013, not you DID return in 2012. My oversight.

So, just to clarify, for 2012, US return only.

For 2013, Full US return, and, "newcomer" return for Canada with Aug 2013 return date.

You have an option for your US return, of filing "dual-status" but this is so rarely to your advantage, that I'm reluctant to even mention it.

CRA will ahve no problem with your non-residency period (assuming they accepted your proper departure return for 2011 -- you wrote departure date and demeed disposition).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Post by nelsona »

As to your brokerage question, you should do this as soon as practicle after you return, there is no tax advanatge or disadvantage in transferring them sooner or later.

What you may wish to do is avois selling any winners until after 2013, as these will not appear on your US return for 2014 (since you will have no need to file).
You might want to sell losers in that period between aug-dec 2013, as this will get the loss on the books for IRS.

Note, you do have the option of "unwinding" any deemed dipsosition that you made uopm departure, if you still have the investents. You would do this if you lost money during your period of non-residency.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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