US / Canada tax return help

lidia22 · Post by **lidia22** » Tue Feb 07, 2012 7:49 pm

Hi,

I live and work in California as of March of 2011 on a TN visa. Before coming here, I worked in Canada. I am planning to return to Canada in May of 2012, so for the 2011 tax purpose, I would like to remain factual resident of Canada. What tax forms do I need to file in US? I was thinking regular 1040 since I was over 183 days in US in 2011 and it would be difficult for me to prove that I have stronger ties in Canada (since I don't own any property). Also does this mean that I would have to pay taxes both in US and in Canada on the income that I earned in 2011? I know that there is a tax treaty, but I am not sure how to report any tax credits on either Canada or US tax.

Any help and advice would be greatly appreciated.

Lidia

JGCA · Post by **JGCA** » Tue Feb 07, 2012 9:39 pm

A factual resident of Canada means that you are Canadian resident and will report all your income to Canada even your US income. If this is what you want then by treaty you can file a full year 1040 in the US report all your work income there pay the tax on it then file a CND T1 include this income from the US on it and claim a foreign tax credit for the tax you paid in the US against the income on the Canadian return, Remember that in the US return you include all your income from Canada also as you do on the Canadian return under treaty you can file a full year 1040 this way.

lidia22 · Post by **lidia22** » Tue Feb 07, 2012 10:23 pm

Thank you JG. I am not sure that I understood the part about reporting the Canadian income in US 1040 tax return. Do I need to report the income that was earned from January to March of 2011 in Canada before I came to US? If yes, since I paid the taxes on that income in Canada, would I also need to pay the taxes in US?

I also wanted to ask how complicated would it be to file non-resident status in Canada from March to the end of the year 2011 and then get reinstalled in Canada once I move back in May of 2012.

Thank you again,

Lidia

JGCA · Post by **JGCA** » Wed Feb 08, 2012 9:31 am

If you want to be a factual reident it means you are a resident, you report all income to Canada for all the year then take a tax credit on the income you reported to the US, Its easy to be reinstated since you were never gone you always reported all your income just file a regular tax return when you return, this is what a factual resident is a person who never left Canada for tax purposes.