EI income from 2008 and my US tax return

dolfandon · Post by **dolfandon** » Thu Apr 02, 2009 7:01 am

For the entire year of 2008, I was a US resident (moved late 2007)

In Jan / Feb/ Mar - I received Unemployment from Canada and then I started a job in the US for the remainder of the year . the Ei was taxed and I have received my slip for taxes .

I have filed my Cdn return, but I am having diffculty with how to enter the EI income on the US return . I believe I should be completing the 1116 form, but this is negatively affecting my US tax return and I don't think it should since I have paid taxes in canada on it already.

I don;t think the 2555 form is the way to go to balance it since that form seems directed at foreign income when still a resident in the country, which I was not in 2008.

Thank you

nelsona · Post by **nelsona** » Thu Apr 02, 2009 8:01 am

1. Why would you have filed a Cdn return, if your moved in 2007. You were supposded to file a departure return in 2007.

Your EI shoudl be subject to a flat 25% tax and nothing more or less. No return should be filed. If the wrong amount was withheld, you send a letter, and if less that 25% was withheld, a cheque for the difference.. What kind of Cdn return did you file anyways, since you had no reportable income (EI is not reportable since it is flat taxed). What province did you NOT libeve in to file?

2. All the EI income (before tax) must be reported on 1040, and your will then use the 25% cdn tax to lower yopur US tax bill by 1116. Obviously you won't get ALL of trhe 25% back on 1116, since you don't pay tyax at 25%.

nelsona · Post by **nelsona** » Thu Apr 02, 2009 9:09 am

btw, did you advise EI that you were had left canada?

dolfandon · Post by **dolfandon** » Thu Apr 02, 2009 9:42 am

Yes...EI was aware that I didn't not live in Canada. I moved to marry late in 2007, my claim actually didn't start until after I'd moved....that was ll good. Yes, the EI appears to have been taxed at 25%

For the 2007 tax year I completed the NR73, Determination of Residency Status (Leaving Canada) and CRA told me I was a Factual resident in 2007 - I only left in Dec of 2007. Don't ask me their reasoning, perhaps it was incorrect.. That form has been resent for this year because obviously I am not fatual, but a true non-resident.

I filed a regular return in 2007, no mention made of an 'exit return' though... perhaps I have erred

The plot thickens a little - should my exit return have been last year...should it be 2008? But since I only have EI...how will this work?

I haven't quite sent my Cdn return - I was about to...seeing your comments here, probably good.

Thanks for the #2 answer as well

nelsona · Post by **nelsona** » Thu Apr 02, 2009 10:25 am

Good on the EI. That means you do NOT report it on your 2008 Cdn return.

As you probably now realize, you should NOT have sent an NR73 back then, nor should you now. You were not required to. You should simply have indicated a departure date of december xx. Your 2008 return should simply be a blank return with a January 1 departure date.

Comply with all the emigrant guide requirements for a departing resident (deemed disposition, list of investments, notifying all payees of your non-resident status, etc).
Do NOT send in another NR73.

I'll tell you why the y incorrectly said you were a factual residet: because on the NR form it asks if you are considered taxresident of another country. Because you moved so late in 2007, you likely said "no'. While technically correct (you said you did not file a 1040 for 2007), you actually became resident (by treaty) when you moved. But since CRA told you you were still resident, you had to file a regular 2007 return.

No real harm, since you did not earn any US money in december 2007, and this now gives you the chance to comply with all the departure requirements as if you left in Jan 2008.