Moving back to Canada. How to file US tax return to IRS?

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smoothoperator
Posts: 6
Joined: Wed Dec 24, 2014 10:46 pm

Moving back to Canada. How to file US tax return to IRS?

Post by smoothoperator »

Hello all,

I am a Canadian citizen who has been living and working in USA as an employee under TN working status for 5 years now. Therefore, I have been filing my US income tax return as a "resident alien" of US for tax purpose. So I have been using the "form 1040" to complete all my tax returns in US.

I am moving back to Canada for work and don't plan moving back to USA again in June of this year. So I would be considered "non-resident alien" of US for tax purpose when I move back to Canada this year.

My questions is that how do I correctly file the income I earned from Jan to June of this year in US to the IRS? Which form do I use? regular 1040? OR 1040NR? OR both?

I just want to be more prepared for next tax season.

Thank you for your help.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You will have the choice of filing a 1040/1040NR dual-status return, or a full year 1040, exempting your Cdn wages.

Just make sure you get any US source income into your hands before you return to Canada, to avoid it being taxed in Canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
smoothoperator
Posts: 6
Joined: Wed Dec 24, 2014 10:46 pm

Post by smoothoperator »

thank you for the reply.

Would it be easier to file a full year regular 1040 form?

from IRS website:
http://www.irs.gov/Individuals/Internat ... rm-to-File

It says for Dual Status Alien, "Taxpayers who were Resident Aliens at the beginning of the tax year and Nonresident Aliens at the end of the tax year should file Form 1040NR labeled "Dual Status Return" with Form 1040 attached as a schedule and labeled "Dual Status Statement.""
It looks like I have more papers to complete if I file under dual status alien.




How about Form 2063, U.S. Departing Alien Income Tax Statement?
http://www.irs.gov/uac/Form-2063,-U.S.- ... -Statement
When do I file that? When I leave in June of this year? Or next year when tax season for year 2015 starts?


Thank you for your help!
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Don't worry about the other form.

I gave you the 2 choices.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
hennady
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Joined: Mon Feb 03, 2014 12:54 am

Post by hennady »

[quote="nelsona"]You will have the choice of filing a 1040/1040NR dual-status return, or a full year 1040, exempting your Cdn wages.

Just make sure you get any US source income into your hands before you return to Canada, to avoid it being taxed in Canada.[/quote]

for my curiosity.
if income is not very large, will dual-status be more beneficial than full year 1040?

my thoughts are that in case of dual-status, it does not include Canadian income completely (is it correct?) while in case of full year residency it would be excluded through 2555. Thus during calculations of tax, a person uses not standard tax worsheet but the one related to 2555, thus US income would be taxed from higher tax bracket.

Or personal exemptions and credits like child credit should be decreased for dual-status proportional to number of days spent in USA?

If not, and US income is not large - it would be possible to decrease tax for dual-status almost to zero. Please correct me if I miss something.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Dual status does not allow standard deduction, and if married does not permit filing jointly, since the final tax is determined on 1040NR, which is problematic for most.

As to using 2555 affecting taxrate, only if non-exempted income is above your exemptions and deductions

As I said, you have the choice. You are still required in either case to all the foreign account stuff, so dual does not save you from that.

As with those who move to US late in year, those leaving early in year are least benefitted by the full-year 1040, but it has been my experience that dual status is the less favourable over full year 1040 (and the option of 1040NR-only is not available for departees.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
smoothoperator
Posts: 6
Joined: Wed Dec 24, 2014 10:46 pm

Post by smoothoperator »

thanks for the clarification nelson,

I will earn around 55 000 of USD income from company I work for in US before moving to Canada in June.

I know that you give me two choices of form to file. But which one will best for my situation if I have nothing to deduct and no other incomes beside my salary from US.
1040/1040NR dual-status return, or a full year 1040?

Thank you once again. :)
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Go to a tax software site and run the choices yourself. I'm not here to run scenarios.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
ketykumeh
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Joined: Mon Nov 16, 2020 4:08 am

Re: Moving back to Canada. How to file US tax return to IRS?

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