canadian holding TN working in US

frank · Post by **frank** » Tue Mar 03, 2009 7:54 pm

I have some questions regarding filing US tax this year.

My status: I have worked in US since July 2007. My wife and younger son came to US on Nov. 27, 2008 as TD dependants, while my elder son is still in Toronto for high school. I filed my US tax using 1040 NR for 2007. I also need to file canadian tax for 2008, because we sold our house in toronto at end of Nov, 2008. so we are still considered as canadian residents for 2008.

My question is which form I should use to file my US tax for 2008? 1040 or 1040NR?

nelsona · Post by **nelsona** » Tue Mar 03, 2009 9:14 pm

You should file a joint 1040 for entire year, reporting all income for both of you.

For canada, you should be filing a departure return, declaring you left 11/27/08, and complying with all departure requirements.

frank · Post by **frank** » Tue Mar 03, 2009 9:35 pm

But my wife came to us on 11/27/2008, Can she be considered as resident of US to file a joint 1040 with me?

what does it mean to file departure return for canada? it still uses general T1 form?

nelsona · Post by **nelsona** » Tue Mar 03, 2009 10:26 pm

She can join you on 1040.

Read the emigrants guide from CRA

frank · Post by **frank** » Wed Mar 04, 2009 9:50 pm

1) I withdrew some RRSP when I first bought my house in july 2006. I suppose to pay back within 15 years begining 2009. What will this affect if I file departure return for 2008 cnd tax?

2) filing a joint return for 2008 US return certainly reduces our US taxrate, we may get some refund from US return ( I did not claim my wife and son on my tax holding), but may take a longer time to get refund, because my wife and son need to apply ITIN # with filing. But we certainly need to pay some cash first to CRA because higher cnd taxrate if we file joint return in US. in the end, we don't get benifit but pay some cash first to CRA. From this point, I don't want to claim too much refunding from my US return. Can I still use 1040NR for 2008 or use 1040 as a single? as long as our US taxrate is not higher than cnd taxrate?

nelsona · Post by **nelsona** » Thu Mar 05, 2009 6:37 am

The HBP program ends when you become non-resident. You had 60 days to pay it back or it all became part of your income, for Cdn tax purposes. Its in the emigrant guide.

Your logib about getting too big a refund doesn't make sense. Submit a correct 1040 joint filing, with the ITIN request attached and it will be processed. The sooner you do this the sooner they will have their ITIN. You do realize that you should have been requesting ITIN on your previous 1040NR too? Your family could always have been an exemption.

You live in US now. Deal with it.

frank · Post by **frank** » Thu Mar 05, 2009 6:55 pm

Thanks.
1) if I select as income, I withdraw 20,000. Is it considered as regular income? or at a higher taxrate? if it is considered as regular income for 2009, it is worth to do that way, because I will not have other cnd income for 2009. Should it be counted for US 2009 tax?

2) I did not request exempation for my family on my last your 1040NR. Can I still to adjust my last year' return after my family get their ITIN this year?

nelsona · Post by **nelsona** » Thu Mar 05, 2009 8:35 pm

The HBP income must be added to your 2008 return. It is too late to repay now. (you would not report this as income on your 1040 as it doesn't meet any IRS definition).

If you amend your 2007 return, you may then also have to amend your 2007 Cdn return, as your foreign tax credit may have changed.

frank · Post by **frank** » Thu Mar 05, 2009 9:45 pm

owh, it is too bad if it is considered as 2008 income. I need to pay higher tax on HBP. Can I still file my cnd tax as residence, not file departure return for 2008? and file my us tax as nonresidence?

nelsona · Post by **nelsona** » Fri Mar 06, 2009 7:45 am

Regardless of how you file in Canada, you should be filing a 1040 for 2008. Its not either/or.

And as for Canada, you left in 2008. You should file as such.

Console yourself with the fact that, even if you decided to lie and say you left in early 2009, you would still pay pretty high tax on the HBP income, since you will have little personal deductions, so you will probably still pay about 25% tax on it. And you will have had to pay Cdn tax on your US income for the extra time you pretend to be resident.

And you'd be opening yourself up to an investigation as to your status, since there is no event in 2009 that you can point to as being a true change in residency.

frank · Post by **frank** » Fri Mar 13, 2009 10:46 am

my accountant prepared the 2008 us tax return. my wife select to file jointly with me even though she was non-residence.
I have a question regarding dependents. the Accountant entered my 2 sons as dependents in 6c on 1040, but "the no. of children on 6c who lived with you " came out as 0. The accountant expained to me that she entered 12 months lived with us, but when she checked the "was the child the residence of canadian or mexico" as YES, the number automatically came to 0 using her software. "dependents on 6c not entered above" on 1040 came out as 2.

Does this affect my son' eligiblity as dependents on our joint return? I need to appy ITIN for my wife and sons, whether does this also affect ITIN application ? according to instruction of 1040, dependent need to live with you more than 6 month. in My case. I worked US in 2008. my wife and 2 sons lived with my wife in canada. my wife and yound sone came to joint me on 11/27/2008, while my elder son continue to stay in canada for study.

Since my wife selcet to file joint return with me, she is considered as deemed residence right? should the kids be same considered as deemed residence of US as my wife?
thanks.

nelsona · Post by **nelsona** » Fri Mar 13, 2009 10:52 am

Shouldn't impact.

As to your ITIN application, you should likely be chacking the bos that states "required for treaty benefit" or somesuch. Cdn residnts are entitled as dependents by treaty, and to be treated as deepndents they need ITIN, so, they are entitled to ITIN even if the y never lived in US. So choose the box that doesn't reuire that they live with you.

frank · Post by **frank** » Fri Mar 13, 2009 11:22 am

Do you mean that I should check (a) "nonresident alien requried to obtain ITIN to caim tax treaty benifit" for My wife and son?

I checked (e) "spouse of U.S. citizen/resident alien" for my wife and (d) "dependent of U.S. citizen/resident alien" on form.

Do you think I should chnage to check (a) "nonresident alien requried to obtain ITIN to caim tax treaty benifit" ? please note my wife file a joint return with me.

nelsona · Post by **nelsona** » Fri Mar 13, 2009 12:12 pm

Isn't that what I just said?

frank · Post by **frank** » Fri Mar 13, 2009 1:34 pm

But, publ 519 says if we select to file jointly return. we need to make statement and sign that we agree to claim any treat benefit. this why I want to make sure whether I can check the reason is for treaty benefit on w-7, since we file jointly return, given my wife ' non-residence status.