US/CAN tax assistance

bexp · Post by **bexp** » Fri Apr 13, 2012 10:59 pm

My husband, myself and my son (all canadian citizens) moved to the US temporarily for my husbands work. He has a TN visa, my son and I, TD visas. I do not work here.
We moved early 2011. We have some canadian and american income for 2011.
We were under the impression that we would file a departure return in canada, and a dual status return in the US, from speaking with the IRS and CRA. However, we discovered that we must file a regular return in Canada claiming my husbands US income, because we still have ties to Canada. We do not have a home there, or children left behind, but we still have our canadian bank accounts and credit cards, and our visa is temporary as his contract is for 2 years. We plan to return to Canada when the contract expires, either at 2 years, or if it is renewed, in as long as 5 years. The person I spoke with at the CRA said we can not be considered residents for tax purposes in both countries, and since the IRS said we must file a dual status return in the US, it seemed we should file a departure return in Canada.
Can we file as non-residents in the US and as factual residents in canada? If we need to file dual-status in the US, can we still file as factual residents in Canada?

Thank you!

bexp · Post by **bexp** » Sat Apr 14, 2012 9:16 am

I should add - his position is a training position and he is paid by scholarships/research grants. His contract is for 2 years only, and that is listed in his offer letter. Our visas expire in 2013 and at that point we must return to Canada, or renew his contract and obtain another visa.

bexp · Post by **bexp** » Tue May 01, 2012 10:08 am

Any suggestions here? Just reviving this since its been a while. Thanks!

nelsona · Post by **nelsona** » Tue May 01, 2012 10:17 am

You should be considered non-resident. Your bank accounts etc are NOT residntail ties.

The CRA person was wrong. You are dual-status in US BECAUSE you have become non-resident in canada, otherwise you would be non-residnt in US. Besides, only if you file as non-residnt in US can CRA assume you are still resident. YOU and IRS are in control of how you file, not CRA, becasue you do not reside in canada.

So, file a departure return for canada following the rules for Emigrant guide. Don't bother with CRA telephlunkies.

For US you can choose to file full year, reporting all income, which will give better result than dual-status. This does not impact Cdn return.

bexp · Post by **bexp** » Tue May 01, 2012 12:42 pm

I understand what you're saying but I'm confused in that if Canada wants proof that we're leaving permanently, we don't have it as his contract is clearly outlined and our visas expire.

nelsona · Post by **nelsona** » Tue May 01, 2012 1:16 pm

the proof you have is that you and your family have left, and have a place to live in US, and are there legally (on TN/TD).

Duration is not important. six months would be sufficient duration.

You are NOT factually resident in canada. You are US residents.

bexp · Post by **bexp** » Tue May 01, 2012 1:17 pm

Thanks :)