Hi,
I have a question regarding the correction form for CRA.
I filled in 2004 tax as a resident of Canada, but starting from November 2004 I've being working for USA company in USA. And I did filled in my foreign income for 2004 as it's needed. For foreign tax credit for CRA I used the sums of tax deductions from W-2. But after I sent the tax to Canada I received the refund from IRS.
So the question is: do I need to send some kind of correction form to CRA highlighting this foreign tax refund this year? Or I might consider it as an income for 2005, and file it in next year?
Thanks!
Correction form for CRA ?
Moderator: Mark T Serbinski CA CPA
You need to correct this on the 2004 return.
First, only tax legally owed and paid is eligible for credit, not simply what was withheld. What you should have used was the federal and state tax that you calculated on your 1040 and your state return.
By the way, as you may have noted, only fica that you paid are eligible for foreign tax credit, however that means that you must add medicare and fica as income to what is indicated on your w-2.
See the 2004 general tax guide and search for fica.
Also, based on our discussion in another thread, you would be wanting to determine exactly when you become tax resident of US, as this will be your departure date from Canada, whether as a non-resident, or a deemed non-resident.
<i>nelsona non grata... and non pro</i>
First, only tax legally owed and paid is eligible for credit, not simply what was withheld. What you should have used was the federal and state tax that you calculated on your 1040 and your state return.
By the way, as you may have noted, only fica that you paid are eligible for foreign tax credit, however that means that you must add medicare and fica as income to what is indicated on your w-2.
See the 2004 general tax guide and search for fica.
Also, based on our discussion in another thread, you would be wanting to determine exactly when you become tax resident of US, as this will be your departure date from Canada, whether as a non-resident, or a deemed non-resident.
<i>nelsona non grata... and non pro</i>
Hi nelsona,
Thank you for the answer.
Unfortunately it seems that it is to late for me to send this correction form to CRA as they already informed me that they started ‘reviewing’ my file. And they requested all the documents from me in order to review the amount IRS refunded.
When I filled in my 2004 return for CRA I honestly indicated in 1040NR the amount I expected to be refunded from IRS. I’ve got this refund from IRS, but I didn’t send any correction forms to CRA. I did not try to hide it I just thought that I would include it into my 2005 income and file it in there. As for me I considered this money as an income for 2005, and not for 2004.
So the question is do I have any chance to avoid a penalty and interest payments on the balance due to CRA? Is there something I can do to convince them that I didn’t do it for purpose and that was just a mistake?
thanks!
Thank you for the answer.
Unfortunately it seems that it is to late for me to send this correction form to CRA as they already informed me that they started ‘reviewing’ my file. And they requested all the documents from me in order to review the amount IRS refunded.
When I filled in my 2004 return for CRA I honestly indicated in 1040NR the amount I expected to be refunded from IRS. I’ve got this refund from IRS, but I didn’t send any correction forms to CRA. I did not try to hide it I just thought that I would include it into my 2005 income and file it in there. As for me I considered this money as an income for 2005, and not for 2004.
So the question is do I have any chance to avoid a penalty and interest payments on the balance due to CRA? Is there something I can do to convince them that I didn’t do it for purpose and that was just a mistake?
thanks!
Is there a particular reason that you did not declare yourself non-resident when you went to US? You would have avoid this headache altogether.
What residential ties did you keep in Canada that made you still a resident?
If I was correcting your return, I would be starting there.
But, if you really only want to correct the foreign tax credit, just submit the T1-adj to correct the line(s), and submit it with the other information that CRA has requested, along with a cheque.
They will come back to for any interest that you owe.
<i>nelsona non grata... and non pro</i>
What residential ties did you keep in Canada that made you still a resident?
If I was correcting your return, I would be starting there.
But, if you really only want to correct the foreign tax credit, just submit the T1-adj to correct the line(s), and submit it with the other information that CRA has requested, along with a cheque.
They will come back to for any interest that you owe.
<i>nelsona non grata... and non pro</i>
Hi nelsona,
I wish to be a non-resident for Canada starting 2004, but unfortunately I cannot as even if I moved to the states in November 2004, my wife was still staying in Canada untill mid of January 2005.
Also I had another ties with Canada(house, car, RRSP etc.)
So it seems that I cannot change my status for 2004, and the only option I have today is to submit T1-adj form with all the documents they requested together, and attach the check.
Thanks for the advice.
We will be trying to become a non-resident for CRA starting from mid of January 2005. But I feel that it is going to be a headache [B)].
First of all according to the USAs present test we are going to be a tax residents for IRS in 2005. But at the same time I was a factual resident for CRA until the mid of January 2005 as my wife(and another ties) was in Canada that time. But starting from the mid of January 2005 I become a non-resident for CRA as my wife joined me in the states, and also I severed almost all ties with Canada.
But currently I'm not sure(and I cannot find the answer anywhere) is it legal to declare in one year two different statuses for Canada, and only one status for the states? Another words can I file in my income for CRA as a tax resident of Canada until the mid of January 2005, and as a tax non-resident of Canada until the end of the year; and at the same time fill in my income for IRS as a tax resident of the states for the whole 2005 year?
Thanks!
I wish to be a non-resident for Canada starting 2004, but unfortunately I cannot as even if I moved to the states in November 2004, my wife was still staying in Canada untill mid of January 2005.
Also I had another ties with Canada(house, car, RRSP etc.)
So it seems that I cannot change my status for 2004, and the only option I have today is to submit T1-adj form with all the documents they requested together, and attach the check.
Thanks for the advice.
We will be trying to become a non-resident for CRA starting from mid of January 2005. But I feel that it is going to be a headache [B)].
First of all according to the USAs present test we are going to be a tax residents for IRS in 2005. But at the same time I was a factual resident for CRA until the mid of January 2005 as my wife(and another ties) was in Canada that time. But starting from the mid of January 2005 I become a non-resident for CRA as my wife joined me in the states, and also I severed almost all ties with Canada.
But currently I'm not sure(and I cannot find the answer anywhere) is it legal to declare in one year two different statuses for Canada, and only one status for the states? Another words can I file in my income for CRA as a tax resident of Canada until the mid of January 2005, and as a tax non-resident of Canada until the end of the year; and at the same time fill in my income for IRS as a tax resident of the states for the whole 2005 year?
Thanks!
Actualy I guess I found the answer [8D].
I can file in my income for CRA as a tax resident of Canada until the mid of January 2005, and as a tax deemed non-resident or non-resident(I still cannot be 100% sure who I am for CRA) of Canada until the end of the year.
At the same time I'll file in my income for IRS as an alien with dual status. And then I can choose to be treated as a <u>US resident for the entire year</u>. Am I right?
Thank you for reffering me to pub. 519, nelsona.
I can file in my income for CRA as a tax resident of Canada until the mid of January 2005, and as a tax deemed non-resident or non-resident(I still cannot be 100% sure who I am for CRA) of Canada until the end of the year.
At the same time I'll file in my income for IRS as an alien with dual status. And then I can choose to be treated as a <u>US resident for the entire year</u>. Am I right?
Thank you for reffering me to pub. 519, nelsona.
That is pretty much what I said in response to your post on the other thread.
How you file in either country has little bearing on your tax status in the other, except that you must, for Canada to grant you non-resident status, file as a resident somewhere else.
According to your information, you will file a 'departure' return in 2005, following the rules set out in the "Emmigrants" guide, with a January departure date on page 1.
Had you not filed you 2004 return yet, I would have advised you to file as a non-resident from November, as CRA would have allowed this date, even with your spouse in Canada, if there was clear evidences that she was in the process of getting this organized to move, which for a 2 month period, is quite reasonable.
But now that you have filed, the burden of prrof that you had left shifts to you, and this is a little harder to do once you've told them that you didn't leave (by submitting a return with no departure date).
Forget the 'deemed non-resident' category. This has narrow application as the rules for it are always changing. If your 'house and spouse' are no longer in Canada, you are a non-resident.
And as for US, I would have nmade 2004 my dual-status year (with the firsat year choice) and be done with the hassles of the dual-status return. Then 2005 would have been a normal tax return (which it still could be). I will deal more with first-year US tax returns in the spring.
<i>nelsona non grata... and non pro</i>
How you file in either country has little bearing on your tax status in the other, except that you must, for Canada to grant you non-resident status, file as a resident somewhere else.
According to your information, you will file a 'departure' return in 2005, following the rules set out in the "Emmigrants" guide, with a January departure date on page 1.
Had you not filed you 2004 return yet, I would have advised you to file as a non-resident from November, as CRA would have allowed this date, even with your spouse in Canada, if there was clear evidences that she was in the process of getting this organized to move, which for a 2 month period, is quite reasonable.
But now that you have filed, the burden of prrof that you had left shifts to you, and this is a little harder to do once you've told them that you didn't leave (by submitting a return with no departure date).
Forget the 'deemed non-resident' category. This has narrow application as the rules for it are always changing. If your 'house and spouse' are no longer in Canada, you are a non-resident.
And as for US, I would have nmade 2004 my dual-status year (with the firsat year choice) and be done with the hassles of the dual-status return. Then 2005 would have been a normal tax return (which it still could be). I will deal more with first-year US tax returns in the spring.
<i>nelsona non grata... and non pro</i>
Good morning, nelsona.
Thank you very much for the update.
Yeah you right, it did make sense for me to fill in my 2004 return as a tax non-resident for CRA, but now it is hard to correct. So I’ll just send CRA T1-adj form together with check. Hopefully penalty will not be huge.
As for the ‘house and spouse’ for 2005 I’m still confused. In case with wife it is more o less clear as she leaved Canada mid of January. Thus I’ll set my departure date for 2005 tax return as mid of January.
As for the house the things are getting a little bit more complicated. Even if we signed in January contract with one of the property managing company to rent our house down and to look after it later on, our house was actually leased to somebody starting from June 2005. So in theory CRA might state that I was a resident for the tax purpose until June 2005 when the lease for our house was actually signed of.
Can they do that?
Thanks!
Thank you very much for the update.
Yeah you right, it did make sense for me to fill in my 2004 return as a tax non-resident for CRA, but now it is hard to correct. So I’ll just send CRA T1-adj form together with check. Hopefully penalty will not be huge.
As for the ‘house and spouse’ for 2005 I’m still confused. In case with wife it is more o less clear as she leaved Canada mid of January. Thus I’ll set my departure date for 2005 tax return as mid of January.
As for the house the things are getting a little bit more complicated. Even if we signed in January contract with one of the property managing company to rent our house down and to look after it later on, our house was actually leased to somebody starting from June 2005. So in theory CRA might state that I was a resident for the tax purpose until June 2005 when the lease for our house was actually signed of.
Can they do that?
Thanks!
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote">So in theory CRA might state that I was a resident for the tax purpose until June 2005 when the lease for our house was actually signed of. <hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Indeed they could, but your life is now in US, so your departure date was january. Leave it at that, as that was your intent.
<i>nelsona non grata... and non pro</i>
Indeed they could, but your life is now in US, so your departure date was january. Leave it at that, as that was your intent.
<i>nelsona non grata... and non pro</i>