Hello All,
I worked in Canada from January to April 2010, and then I've moved to the US in May 2010 for the rest of the year on TN-1 and plan to stay for at least another year.
I do not own anything in Canada, except bank accounts, healthcare card and driver's license (which I'm getting rid of now).
I was planing to file a departure from Canada from May 2010 and therefore only declare my income until May up there.
For the US, I had only one employer / W-2. Since I've been here since May, I would file as a resident of the US (more than 183 days) and have to declare all my interests from mutual funds / bank accounts in Canada as 1099-INT and my income until May as world income. Is that correct ? Can I get foreign tax credit for that Canadian income until May ?
Thanks for your help,
Frank.
US & Canada tax filing in first year
Moderator: Mark T Serbinski CA CPA
That sounds correct. You have a choice on how you treat your Cdn wages on your 1030. You can either take credit for Cdn tax, or, better, exempt the wages using form 2555. Other Cdn income can only use the foreign tax credit.
Don't forget your deemed dispositions on your Cdn departure return. Read the emigrants guide from CRA.
You also need to advice your banks and brokers that you are non-resident. This will usually mean divesting of mutual funds outside RRSP.
For US there are RRSP reports to file with form 8891/
Don't forget your deemed dispositions on your Cdn departure return. Read the emigrants guide from CRA.
You also need to advice your banks and brokers that you are non-resident. This will usually mean divesting of mutual funds outside RRSP.
For US there are RRSP reports to file with form 8891/
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks a lot Nelsona! This does bring out a few more questions though, if you wouldn't mind.
From what I gathered, I can't use form 2555, since I was not a US resident alien at the time I made this income (I moved to the US right after making this income). Is that correct or am I misreading that ?
If I can't, I was planning to take the credit for Cdn tax, but since I was working outside of Canada for those 4 months for a Canadian company (t-626), this really won't amount to much and probably won't account for all the taxes due in the US for that income. Am I required to use the amount of taxes with the T-626, or can I report the normal amount I would've paid ?
Is it required to empty all my investment accounts in Canada? Especially since I do plan to go back after 2-3 years. I would prefer to leave everything as it is now (RRSPs, TSFAs, and non-registered accounts), and then file with form 8891 and TD F 90-22.1, since I have more than 10,000 in foreign banks. Therefore, I wouldn't need to file deemed dispositions in Canada.
Thanks again, this has been very helpful!
Frank.
From what I gathered, I can't use form 2555, since I was not a US resident alien at the time I made this income (I moved to the US right after making this income). Is that correct or am I misreading that ?
If I can't, I was planning to take the credit for Cdn tax, but since I was working outside of Canada for those 4 months for a Canadian company (t-626), this really won't amount to much and probably won't account for all the taxes due in the US for that income. Am I required to use the amount of taxes with the T-626, or can I report the normal amount I would've paid ?
Is it required to empty all my investment accounts in Canada? Especially since I do plan to go back after 2-3 years. I would prefer to leave everything as it is now (RRSPs, TSFAs, and non-registered accounts), and then file with form 8891 and TD F 90-22.1, since I have more than 10,000 in foreign banks. Therefore, I wouldn't need to file deemed dispositions in Canada.
Thanks again, this has been very helpful!
Frank.
You can use 2555, since cdns can use anything US citizens would use in similar circumstance, by treaty. Since a US citizen living in canada and moving to US would use 2555, so can you.
If you use 1116, then it is your final tax, not imaginary tax. You will also find that vwery little of the Cdn tax, even in at full Cdn rates, would be used in the FTC calculation. Go with 2555.
You are becoming non-resident, so you will have deemed disposition regardless of what you do with the assets. That's what "deemed" means. Your bank/broker will dictate whether you can keep the non-registered investment accounts with them or not (99% will not keep you), but in any event you will not be allowed to trade in those accounts while non-resident, so should either move the assets to a US broker, or sell. Even your RRSP may need to be transfered to a US-compliant brokerage, like TD Waterhouse.
Your TFSA will be taxable in US, so you might as well simply empty it, and replenish when you get back.
If you use 1116, then it is your final tax, not imaginary tax. You will also find that vwery little of the Cdn tax, even in at full Cdn rates, would be used in the FTC calculation. Go with 2555.
You are becoming non-resident, so you will have deemed disposition regardless of what you do with the assets. That's what "deemed" means. Your bank/broker will dictate whether you can keep the non-registered investment accounts with them or not (99% will not keep you), but in any event you will not be allowed to trade in those accounts while non-resident, so should either move the assets to a US broker, or sell. Even your RRSP may need to be transfered to a US-compliant brokerage, like TD Waterhouse.
Your TFSA will be taxable in US, so you might as well simply empty it, and replenish when you get back.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Great, thanks! I'll go with form 2555 then for my Canadian income, and I will empty my TFSAs!
Sorry, I was not sure what deemed meant, since I'm primarily french-speaking.
I will ask my brokers & banks if there's any way to keep my accounts up there, with a US address on file. For now, I kept my mother's Canadian address for them. Can't I leave it like that or that would make me a Canadian resident for tax purposes ?
All of those accounts that I put on the deemed disposition from Canada, I'll have to pay taxes on the whole amount?
You've been very helpful sending me in the right direction!
Frank.
Sorry, I was not sure what deemed meant, since I'm primarily french-speaking.
I will ask my brokers & banks if there's any way to keep my accounts up there, with a US address on file. For now, I kept my mother's Canadian address for them. Can't I leave it like that or that would make me a Canadian resident for tax purposes ?
All of those accounts that I put on the deemed disposition from Canada, I'll have to pay taxes on the whole amount?
You've been very helpful sending me in the right direction!
Frank.
You will have to report the capital gains and losses as if you sold on the day you moved, not on the entire value.
Having your mom's address on your accounts will not make you a resident of canada, however to do so is lying, and is against securities regulations.
Having your mom's address on your accounts will not make you a resident of canada, however to do so is lying, and is against securities regulations.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Hi Nelsona,
About form 2555. With the physical presence test about the 12 consecutive months outside the US.. It looks like the 330 days must be in the current tax years ?
I've been trying with the full 12 months until my arrival to the US in May 2010, and it won't give me anything. Am I missing something ?
About form 2555. With the physical presence test about the 12 consecutive months outside the US.. It looks like the 330 days must be in the current tax years ?
I've been trying with the full 12 months until my arrival to the US in May 2010, and it won't give me anything. Am I missing something ?
You qualify under the bona fide residence test. The year can extend betwen calendar years. yours would have started in 2009 and ended in 2010.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Canadian on J1 Visa
Hi Nelsona,
I do have one question.
I moved to US in June 2010 on J1 Visa (physician on training).
And for 2010 I have now 2 tax forms: Canadian T4 and US W2.
My family (husband and 16 yo son) live in Canada and DO NOT live/work in US. I understand from previous posts that I need to file form 1040NR in US and also canadian tax return (and mention US income in canadian tax refund).
What is my filing status in form 1040NR ("Single"?"Married resident of Canada"? or "Other married non-resident alien"?) And also can I file as a Head of Household (I live alone in US and pay for rent from my US wages)?
Thank you in advance.
I do have one question.
I moved to US in June 2010 on J1 Visa (physician on training).
And for 2010 I have now 2 tax forms: Canadian T4 and US W2.
My family (husband and 16 yo son) live in Canada and DO NOT live/work in US. I understand from previous posts that I need to file form 1040NR in US and also canadian tax return (and mention US income in canadian tax refund).
What is my filing status in form 1040NR ("Single"?"Married resident of Canada"? or "Other married non-resident alien"?) And also can I file as a Head of Household (I live alone in US and pay for rent from my US wages)?
Thank you in advance.
Married resident of canada. You aren't looking to aggressively reduce your US tax, since it will just mean more tax in canada. Just file a straightforward 1040NR.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
[quote="nelsona"]You qualify under the bona fide residence test. The year can extend betwen calendar years. yours would have started in 2009 and ended in 2010.[/quote]
I know the physical presence test can span a couple of years, but I understood that the bona fide residence test required at least one full calendar year (Jan 1 to Dec 31). No?
I know the physical presence test can span a couple of years, but I understood that the bona fide residence test required at least one full calendar year (Jan 1 to Dec 31). No?