Nelsona, you are doing a great job! Much thanks!
I previously posted late November and you gave some good advice on determining residency in my situation.
A quick review of my situation: I moved from Canada to USA midyear 2009 with a TN visa. My wife moved shortly thereafter with TD status. I am working full-time, but am also registered full-time in a Canadian University (finishing a Masters thesis), and received scholarship/award income in Canada before I moved. My wife worked in Canada before she moved, but is now receiving EI payments in the USA and has only been able to find work for a couple days here and there. They are withholding 25% from her payments.
I'm now looking at filing my taxes and a have a couple questions:
1) I will file departure tax return for Canada, as of my residency change date, and my obligations will be complete. My wife will be required to file a departure tax return AND a separate non-resident tax return because she worked a couple days while receiving EI. However, the EI amounts are not included on this return since tax was already withheld. Right?
2) We both are required to file US tax returns, but have the option of filing separately as dual-status individuals, or married jointly as residents for the whole year - the option with the lowest tax liability is the obvious choice. Correct?
3) Either way, my wife must claim the EI and few days of work income as world income. Which form does she do this on? 2555? It only references income from a W2...
4) It looks like I am in a bad situation - if I file as a full year resident, my scholarship income becomes taxable in the USA, and I don't get to use my education tax credits (tuition + per month credit) available in Canada. However, if I file as dual status, I lose out on US credits and things are pro-rated. Any good suggestions?
5) I also have rental income that is being withheld at 25%, but I will use 217 to reduce the tax payable at years end. Do I also include these amounts on my US tax return on 2555? Do I claim a tax credit for tax paid to Canada based on my expected 217 assessment?
Thanks!
First year non-resident filing
Moderator: Mark T Serbinski CA CPA
Not much time to answer, but I'll just point out your errors:'
1. Cdns only file 1 return, when they leave canada, reagrdless of when they earne or what type of income they earn. Your wife will file a departure return, reportin world income until that date, including EI. For Cdn income after the departure date she either (a) reports it on that return, or, in the case of EI, (b) simply takes the 25% witheld as non-resident as final payment, her choice. For (a) she needs to have little non-Cdn income after departure, and for (b) she needs to be sure that she really has paid 25% on her post-departure EI.
2. Yes, in fact, if either of you don't meet the substantial presence test, you can file as non-resident for 2010, just another choice.
3. If you file either full of dual, her Cdn income from after arrival must be reported. No 2555 is allowed for period after entry into US, and EI is not qualified for 2555, only wages are. YOu would use 1116 to get foreeign tax credit.
4. your choice. deductions arenot prorated in US.
5. You would report all rent as rent income, and use 1116 for the foreign tax credit, not 2555. You need to depreciate in US.
5.
1. Cdns only file 1 return, when they leave canada, reagrdless of when they earne or what type of income they earn. Your wife will file a departure return, reportin world income until that date, including EI. For Cdn income after the departure date she either (a) reports it on that return, or, in the case of EI, (b) simply takes the 25% witheld as non-resident as final payment, her choice. For (a) she needs to have little non-Cdn income after departure, and for (b) she needs to be sure that she really has paid 25% on her post-departure EI.
2. Yes, in fact, if either of you don't meet the substantial presence test, you can file as non-resident for 2010, just another choice.
3. If you file either full of dual, her Cdn income from after arrival must be reported. No 2555 is allowed for period after entry into US, and EI is not qualified for 2555, only wages are. YOu would use 1116 to get foreeign tax credit.
4. your choice. deductions arenot prorated in US.
5. You would report all rent as rent income, and use 1116 for the foreign tax credit, not 2555. You need to depreciate in US.
5.
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
Only the one who has not met SPT has this option.
Only if you think your Cdn non-residency is questionable would you avoid using 1040NR for the whole year, but her Cdn status is not in doubt.
Only if you think your Cdn non-residency is questionable would you avoid using 1040NR for the whole year, but her Cdn status is not in doubt.
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
I just realized that if she is doesn't pass SPT, she actually doesn't have to file anything to the USA for 2010, right?
She will be a non-resident in Canada's eyes as of her departure date, and file the departure return. She will also be a non-resident as viewed by the USA, and this should be ok. Obviously in 2011, the story will change...
She will be a non-resident in Canada's eyes as of her departure date, and file the departure return. She will also be a non-resident as viewed by the USA, and this should be ok. Obviously in 2011, the story will change...