Canadian living/earning in US for Part of first year in US

[idrivearocket]

I have been in the US for more than 183 days (maybe just over 200), mostly in and out on a visitors visa. Since October, I have been in the US on an H1B visa. Throughout 2009, I kept a permanant home in Canada, but spent many days in the US living out of hotels, corporate housing, and finally my own apartment in Chicago for the last 2 months of 2009. I was paid by a Canadian company for the first 10 months of the year, and by a US company for the last 2 months of the year. I have not declared non-residency with Canada.

Due to the tax treaty, the 183+ days does not count for the IRS, since I still have my permanent home in Canada. I gather that I am to fill out a complete Canadian tax return and report both my Canadian and US income. (amongst other Canadian investment income, RRSP contributions, etc.)
Then, I file a tax return with the IRS, trying to claim back the amount in taxes that I have paid to the IRS for the last 2 months. (because I gather Canada will have the rights to even the last 2 months of income tax, despite the US source)

Is my understanding correct? Thank you.

[nelsona]

Since you have an appartment in US, a job in US, and meet tax residency requirements, you should be viewing yourself as US tax resident (by treaty) from October on,

File a departure return for 20098 with canada, with Oct departure date, and a full year 1040 for US, taking credit for your Cdn tax. You have the option, if it is better for you, to chose a 1040NR for the 2 months in 2009, by climing treaty residency in canada until October, if that yields less US tax.

[idrivearocket]

Thanks for your reply,
Thank you for proposing my 2 options.

I do not intend to return to Canada at this point, so I have to pick a departure day anyhow. However, I am not prepared to file non-residency in Canada yet either. (I do not meet non-residnecy criteria yet, but perhaps will do so at some point in 2010.)

My only remaining question: I assume this means I can maintain dual residency going forwards, while still filing the departure return with Canada for Nov.1, 2009?
Thanks

[nelsona]

You do meet non-residency criteria: you live and work in US. SPT, as you pointed out, is not the criteria you need to satisfy.

neither govt likes dual tax residency, and it is also difficult and proabaly more expensive for you. You will not be able to point to a future event as to you when you left. You left in October, and should file in Canada as such. Follw the instructions in the Emigrants guide from CRA.

How you file in US doesn't impact this decision.

I'm not sure what else you are talking about in terms of 'residency'. If you file a departure return, you are non-resident of Canada from that point, not dual-resident.

[idrivearocket]

I have 2 possible complications regarding the non-residency claim in Oct '09.
1) I contribute to the home buyers plan and must put back the money into RRSP within 60 days of the non-residency claim. I have done so, but about 100 days after Oct of 2009. (I put it back as soon as I found out about the rule)

2) I still own my primary residence in Canada. (primary until moving to the US) It has appreciated considerably in the past 6 years since purchasing in 2003. I plan to sell it within the coming couple months. Of course I prefer to avoid paying capital gains on the appreciation. Must I remain a resident of Canada to remain exempt of capital gains on my primary residence?

To qualify non-residency in Canada, I read one must dispose of all property, bank accounts, Cdn drivers licence, etc. I am not in a position to be able to dispose of all such items yet.Thank you,

[nelsona]

There will be no tax on your Cdn home regardless of your residency situation.

You are non-resident.