Tax Questions on Move Back to Canada

[baileybones]

I have a few questions and I apologize in advance if these have been covered in other forums. I hope it’s not too long to read but I didn’t want to leave anything out.

I am a Canadian citizen and after spending 9 years in the U.S., I was transferred back to Canada in June 2006. I am or was a green card holder. Because I had income from both countries in 2006 I must now complete both Canadian and U.S. tax returns. I would like to keep my green card as long as possible so I plan a doing a 1040 for the entire year. My plan is as follows.

For the Canadian T-1 return:
1) Enter arrival date of June 01, 2006
2) Report all income from June through December
3) Because I have foreign property > $100,000.00 (IRA and 401K), include this as well

For the U.S. 1040 return:
1) File for an extension until June 2007
2) Complete the 1040 return including world income from January through December
3) Complete the 2555 form to exclude my Canadian income from June through December. This is why I am filing for an extension. To be able to satisfy the Physical Presence test of 330 days. June 2006 to June 2007 should satisfy the requirement
4) Complete the TDF 90.22.1 form to include Canadian bank accounts and Canadian owned stocks.
5) Complete the 8891 form to include my Canadian RRSP’s.

Does this all make sense and look correct? The last thing I want is the IRS after me because I filed incorrectly.

Thank you for your time.

[nelsona]

2 points:

remember hat filing a 1040, while required, is not sufficient to maintain your GC.

2555 is only to exclude your Cdn WAGES.

[baileybones]

Thanks Nelson for the reply. I'll proceed with my plan.

Two quick questions
- on the 1040 – is it OK to put my Canadian address?
- concerning form 8891, if I elect to defer U.S income tax, does that mean I don’t have to worry about paying any kind of U.S. tax on my RRSP’s?

Thanks again

[nelsona]

What other address were you going to put?

The tax deferral lasts until you withdraw funds from your RRSP (including HBP). At that point some of the withdrawl will be taxable in US.

[baileybones]

Thanks again. I have a relative with a U.S. address that I was thinking of using but I'll go ahead and enter my Canadian address.

Any tips on retaining my GC. I would hate to lose it. I still have U.S. bank accounts, credit cards, drivers license, investments. Would it help if I bought property? And how long can I remain out of the U.S. before they consider it abandoned?

[Bill_S]

GC abandonment is a very complex subject; there is no simple answer to your question. I will offer that you are on thin ice right now, especially if you have been out of the USA for more than 6 months. I hope you obtained a re-entry permit before leaving. If you don't have one, and have been out several months, you need to talk to a good immigration lawyer ASAP. If your absence is longer than 1 year, and you have no re-entry permit, you will have big problems with the GC.

[nelsona]

One simple answer is that what you have as ties now is not sufficient. Its not a tax issue, so the address you put on your return. It's an immigrtaion issue: where you sleep, and what permission you got to leave BEFORE you left.