I am a Canadian citizen. I lived and worked the first 10 months of 2015 in Canada together with my US spouse and then we permanently moved (emigrated) to the US Nov 2015. I went in to file my taxes in a local H&R Block branch here in California yesterday but I am not sure if the tax consultant did the right thing for us. I would appreciate some comment on this from the experts here.
1. I had Canadian income from an employer in Canada for the first 10 months and no income either in Canada or US afterwards.
2. My spouse had US income during all 12 months of 2015 (that is in Canada and then here in the US).
3. I have Canadian Federal and Provincial Tuition, Education, and Textbook carryover credits.
4. I am a Citizen of Canada and permanent resident of the US (as of 2015) and my wife is a Citizen of the US and permanent resident of the Canada (again as of 2015).
5. Our Canadian income was 4-5 times our US income.
The tax consultant filed 1040 forms for us and now we have to pay taxes to the IRS based on our net world income (80% of which is from Canada and taxes have already been withheld for by the CRA). He assured us that we will receive the double taxes we are paying to the IRS later once we file our taxes with the CRA (please note he could not file the Canadian taxes and did not help us with that).
Now I feel if we had filed our taxes with the CRA first and the IRS later (a) I could have used my Canadian tuition tax credit better and (b) did not need to pay taxes to the IRS now and wait to be refunded by the CRA later.
Am I correct in thinking that?
Canadian citizen moved permanently to the US
Moderator: Mark T Serbinski CA CPA
Unless your 1040 was filed using 2555 to EXEMPT your Cdn wages, instead of using 1116 to take credit for your Cdn tax, your 1040 was mishandled.
I presume you filed a departure return for Canada, and, because of tuition credits, paid little tax in Canada?
So, how was your 1040 filed? with or without forms 2555 and/or 1116?
And I'm not sure what your wife's situation was location -wise. Was she living in US all year, or not? How did she have "US income" if living in Canada?
And when did you become US green card holder?
I presume you filed a departure return for Canada, and, because of tuition credits, paid little tax in Canada?
So, how was your 1040 filed? with or without forms 2555 and/or 1116?
And I'm not sure what your wife's situation was location -wise. Was she living in US all year, or not? How did she have "US income" if living in Canada?
And when did you become US green card holder?
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 presume you filed a departure return for Canada, and, because of tuition credits, paid little tax in Canada?
I have not done anything for my Canadian taxes yet.
> So, how was your 1040 filed? with or without forms 2555 and/or 1116?
Neither 2555/1116 was used. Only 1040 was used and we are paying taxes to the IRS based on our world income.
> And I'm not sure what your wife's situation was location -wise. Was she living in US all year, or not? How did she have "US income" if living in Canada?
My wife worked remotely as a contractor with a company here in California during her stay in Canada. Her income was filed as a business. She was in Canada the 9 months between Feb-Oct and in US for the 3 months of Jan, Nov, and Dec.
> And when did you become US green card holder?
I received my US green card Sep 2015.
I have not done anything for my Canadian taxes yet.
> So, how was your 1040 filed? with or without forms 2555 and/or 1116?
Neither 2555/1116 was used. Only 1040 was used and we are paying taxes to the IRS based on our world income.
> And I'm not sure what your wife's situation was location -wise. Was she living in US all year, or not? How did she have "US income" if living in Canada?
My wife worked remotely as a contractor with a company here in California during her stay in Canada. Her income was filed as a business. She was in Canada the 9 months between Feb-Oct and in US for the 3 months of Jan, Nov, and Dec.
> And when did you become US green card holder?
I received my US green card Sep 2015.
So, both your US and Cdn taxes will be VERY complicated for 2015, and I can assure you that the 1040 was completely mishandled by this H&R Blockhead.
Both your wages from before the move and her contractor income form before her wmove should have been exempted from US tax using form 2555.
It was ludicrous for him to say that you would somehow majically get your taxes back from Canada, since the income is considered Cdn-sourced, so Canada won't give any back based on the US tax.
You probably need to see a cross-border professional on this one. It will cost you big time.
And next year start looking at your taxes in November, not April.
Both your wages from before the move and her contractor income form before her wmove should have been exempted from US tax using form 2555.
It was ludicrous for him to say that you would somehow majically get your taxes back from Canada, since the income is considered Cdn-sourced, so Canada won't give any back based on the US tax.
You probably need to see a cross-border professional on this one. It will cost you big time.
And next year start looking at your taxes in November, not April.
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