Canadians moving to US on green card, self-employed

pinkblue · Post by **pinkblue** » Fri Mar 10, 2017 12:42 am

My husband and I entered US in 2016 on Green cards. I'm Canadian, and he's a permanent resident of Canada. He's self-employed. and we own a house in Canada and haven't sold it. I also own a condo and rent it out. We don't own property in US, currently renting apartment. All these are making things very complicated. I did a lot of research but couldn't find much addressing our situation. Hope to get help from this forum :) If I'm repeating old questions, please kindly post a link to where it was answered.

My husband started working in US in September 2016 on working visa, while I stayed in Canada and worked full time for Canadian company. After we both got the green cards in November 2016, I also moved to US and worked remotely for the same company (paid in CAD$), until Jan 1, 2017 when I was transferred to the US branch (paid in US$). Looks like we need file Canadian AND US tax for 2016, maybe for a few more years if we don't sell the house soon. My questions are:

1. Should we both file US tax for 2016? I don't have any US-sourced income in 2016, but I did become green card resident in November 2016.

2. My husband needs to file for GST/HST in Canada because he's self-employed. For 2016 filing, how is that done on his 3-month earnings in US? Is there an equivalent thing in the US?

3. In Canada, self-employed report T4A and can claim a lot of expense tax-deductible; while full-time employed report T4, and usually claim no expense. Is that so clearly distinguished in the US? He received W-2 form, like a full-time employed would.

4. Should we file jointly in the US? How does the foreign tax credit work if we file Canadian tax separately and file US tax jointly?

5. The house. It's our primary residence. We own and lived the house for 18 months when green card status was activated. Will we be waived of the US capital gain tax (partially I guess)? And we have one year to sell it to avoid capital gain tax in Canada?

6. The Condo. Should we disclose all Canadian property in US 2016 filing? What's the US tax implication on the rental property in Canada?

6. I'm thinking, we file Canadian tax first, and bring the forms to a US tax expert for US filing. Is that a good idea? Or better find a cross-border tax expert to do both?

Thanks in advance for your time, thoughts, and comments!

pinkblue · Post by **pinkblue** » Thu Mar 16, 2017 12:07 am

Any help is appreciated.

Journadian · Post by **Journadian** » Thu Mar 16, 2017 3:46 pm

I have a sort of similar situation but I arrived the USA earlier so I end up needing to do both Canada and us tax.

Question 5 I think you mean form T1244 defer deem disposition of property? I haven't filled this form so I have no idea sorry. But take a look at T1161 if you need to fill, there's a hefty fine if you don't.

question 6 if you haven't done the NR 6 income property for non resident do it soon.

Good luck

pinkblue · Post by **pinkblue** » Fri Mar 17, 2017 11:28 am

Thank you Journadian!

I don't want to declare non-resident from Canada, although I've got green card. Mainly because I still have a house there to sell, and RRSP...

Are you declaring non-resident from Canada?

nelsona · Post by **nelsona** » Fri Mar 17, 2017 11:41 am

One doesn't "declare" non-residency, one become non-resident by facts, and/or treaty. Once you legally live in US in a residence that is "yours" (rented or owned) and either meet the GC or SPT test, you are a CDn non-resident.

pinkblue · Post by **pinkblue** » Fri Mar 17, 2017 12:10 pm

Thanks for correct my mis-understanding, nelsona!

Can capital gain tax in Canada be waived when we sell the house? How will US tax for the capital gain? (the house is our primary residence in Canada for 18 months when receiving GC)

nelsona · Post by **nelsona** » Fri Mar 17, 2017 12:30 pm

It will not be taxed in Canada if you sell with 12 months of moving out.

In US you will only be taxed on the amount after your moved, so you will need to have a solid FMV evaluation based on your moving date. Because you didn't live in it 24 months, you don't get the "normal" tax exemption, but because you were non-US taxpayers living in Canada, you get a treaty based exemption.

pinkblue · Post by **pinkblue** » Tue Mar 21, 2017 3:56 pm

So for year 2016, should I file as Canadian resident or US resident? Green card took effect on Nov 24, 2016, but we went back to Toronto for Christmas. The real "settle in" date is Jan 1 2017, when my job is officially transferred.

Seems one cannot be resident in both, has to file as resident in one country and non-res in the other. I'm hoping to file as Canadian-resident and US non-res.

nelsona · Post by **nelsona** » Tue Mar 21, 2017 4:24 pm

In Canada, how you file is strictly dependant on whether you were resident or not, and on when you left.

With your Grren card, you pretty much have to do the same for US. Essentially, once you got an apartment, you became US resident and Cdn non-resident.

nelsona · Post by **nelsona** » Tue Mar 21, 2017 4:29 pm

Had eithr of you gone to US on a temp work visa, with no GC, then I could go with filing as a non-ressint of US and resisant of Canada, because you would not have met any of the requiremnts for tax residency in UDS for 2016, ie. enough days spent in US, and enough days spent at the end of the year.

But GC makes you US resident in your case, him from September and you from November. he can argue that your being In Canada between sept and Nov would keep him resident until novemebr, but not past that. And there isn't any advantage to force Cdn residency for those extra 2 months, since he would simply have more taxes to pay in Canada.

pinkblue · Post by **pinkblue** » Thu Mar 23, 2017 11:12 am

My accountant in Canada suggested that I file tax in US first, then take the tax report to her for Canadian filing.

I'll tell the US accountant to file 8891 for RRSP, what else? Any potential risk to this approach?

nelsona · Post by **nelsona** » Thu Mar 23, 2017 11:33 am

I don't know what "approach", you are talking about. there is no information on your 1040 that will be needed on your Cdn DEPARTURE returns. And even if there were, the order of filing isn't important -- but doing the calculations simultaneously IS. Sounds like she's not quite sure what she is doing; you should find another acct who is better suited to handle you situation.

And 8891 has not in in effect for a few years now