Can these incomes be exempted from US or Canada taxes?

breton06 · Post by **breton06** » Tue Apr 03, 2012 12:00 am

Hi! In march 2011, my husband, my newborn son and I moved from Canada to USA. We are considered US residents as we left for good and didn't keep significant ties with Canada. My husband is on a TN visa. I am on on a spouse visa, but recieved a lot of money from canada during the year since I was on maternity leave. Here are our incomes for 2011. Can someone tell us which ones are taxable by US and/or by Canada and for which ones I can ask for an exemption or else, to avoid the double taxation?

- my husband's January to March salary income from canadian employer
- my canadian employer's maternity leave salary from January to August
- my husband's salary income from american employer
- my canadian parental protection fund for the whole year
- my employer's pensiun fund in Canada
- my Registered Retirement Savings Plan in Canada
- my bank account with 10k$ in Canada

Also, should we fill jointly or separated?

I know I've asked for many different things. All your help will be much appreciated since I will probably have to fill our tax reports to both countries ourself...

Thank you!

Marie

nelsona · Post by **nelsona** » Tue Apr 03, 2012 9:20 am

Once you moved to US, all your income becomes taxable in US, and all your Cdn income remains ALSO taxable in canada (sometimes flat rate)

Are all those things listed below "income". If you ddi not take out any RRSP, or pension, this is not income. Bank interest is income. I don't even know what a parental protection fund is.

You wil lfile departutre returns in Canada, and pay any departure tax. The CRA emigratnt guide will direct you on Cdn matters .

For US, you should file jointly, and report ALL income for all year, and then take crdits for Cdn tax paid.

breton06 · Post by **breton06** » Tue Apr 03, 2012 10:03 am

Thank you for your reply,

A parental insurance fund is an income. It's the province's social program for parental (maternity leave). It gave me about 45 000$ in 2001 and I had to pay taxes, 3500$ to the federal gvt and 4500$ to the provincial government on this income.

You are right, my retirement funds haven't been retired. But I contributed to them during the year.

Marie B.

nelsona · Post by **nelsona** » Tue Apr 03, 2012 1:13 pm

45 000? wow! I didn't realize the QPIP was so lucrative!

You say you got maternity leave from your job. wouldn't that prevent (or at least delay) you from collecting QPIP? Just a question for my knowledge.

breton06 · Post by **breton06** » Tue Apr 03, 2012 2:59 pm

Yes, the Quebec's program for new parents is very generous.

What I got from my employer is a compensation they gave me to boost my income to 95% of my usual salary for 6 months during my maternity leave (the province program "only" gives you something between 55 and 70% of your normal income). So it's not an income from working hours. It's specific to parental leave.

breton06 · Post by **breton06** » Tue Apr 03, 2012 3:19 pm

Our Canadian taxes ave already been deducted at the source.

So I will make a US declaration and have started to go through the CRA emigratnt guide. Still got a few more questions :

1. For our US declaration, we will fill forms 1040 with a full year residency in the US. We will get credits with forms 2555 and 1116. I will also sent form W7 for myself to get an ITIN number.

2. I understand that we will be credited by the CND govermenent on the taxes paid to them. They did not mention that when I called them yesterday, strange isn't it? Anyways, I read in this forum that the taxes payed on our canadian income might be elegible for a lower rate (something to do with the NR5 canadian form). Could we be eligible?

3. Do you know if the interests gained on my RRSP are taxable in the US? If yes, is it for the 2011 year only or from the time the account has been opened?

Thanks again!

nelsona · Post by **nelsona** » Tue Apr 03, 2012 3:59 pm

Right. Just like severance. Since you can't get severance an EI (it delays EI), it would seem that you cannot collect maternity leave from work and QPIP,no?

breton06 · Post by **breton06** » Tue Apr 03, 2012 4:18 pm

I actually recieve maternity leave income from BOTH provincial social plan and my employer. It is permitted as the employer completes the missing salary. The employer even speakd directly with the province social program managers to get their exacts numbers before they establised the amount missing to get to 95% of my usual working salary. So it's not like EI and leaving package...

breton06 · Post by **breton06** » Tue Apr 03, 2012 4:21 pm

Few employers do it. I have a very generous one!

nelsona · Post by **nelsona** » Tue Apr 03, 2012 4:32 pm

Yes, I found my answer. The employer, if he has a mat leave plan CAN reduce ther payments based on the QPIP, but they are not required to, and the QPIP does not have to reduce thier payments in any case.

breton06 · Post by **breton06** » Tue Apr 03, 2012 4:38 pm

Is there a need to fill our us declaratoin before april 15th? Should we make an estimate and proroate until june 15th because of our ITIN number demands?

nelsona · Post by **nelsona** » Tue Apr 03, 2012 5:06 pm

It is unlikely that you will owe taxes in US, if your spouse was having his pay withheld as SINGLE, so I would not worry about extension.

WhAt you do need to be worrying about is filing your Cdn departure return, and departyure tax, and finding soemone to do your US taxes for the first year.

JGCA · Post by **JGCA** » Tue Apr 03, 2012 7:36 pm

Yes the Quebec Parental Insurance Plan is quiet unique as a Quebec resident I see lots of these type of situations where people get very attractive mat leave payments and QPIP is not affected.

The departure returns you need to file remember you must file as a resident of Quebec if that is where you were last before departure.

nelsona · Post by **nelsona** » Tue Apr 03, 2012 9:11 pm

Also, QPIP is probably supposed to be flat taxed at 15% (by fed) and not by quebec after departure. You will need to determine what was paid to you before departure and what was paid after.
So, you should get quite a refund from MRQ.

But it will be all taxable in US.

breton06 · Post by **breton06** » Tue Apr 03, 2012 10:53 pm

Thanks again for all these precisions. I'm a bit lost here...

Should we fill our U.S. declaration jointly with all our U.S. and Canadian incomes and say that my husband is the head of household? Then, what is my husband's SINGLE status you are tahling about?

Thanks!