I will use ufile again as you suggested and let you know the results. Probably won't be until tomorrow night though.
Based upon your info, do you think I am better off biting the bullet and filing 2007 and 2008 taxes? Or do you think I have a strong enough case that CRA will find me to be a deemed non resident? I really don't want to pay anymore than I have to but at the same time, I don't want to get in trouble with CRA.
My wife worked in the first part of 2007 in the US. She did not work in Canada in 2007. Is her income in US relevant in Canada because she was a non resident at the time?
Cdn Tax preparation question
Moderator: Mark T Serbinski CA CPA
Its only relevant on your 2007 Cdn return to the extent that whatever income she had in effect lowers the percent of the total amount of US tax that you can use on your Cdn return.
Example. You made $100K and she made $20K. Your total fed/state tax was $12K, and your FICA was $12K. her fica is irrelevent. The 12K of tax would be prorated between her and you (10K for you, 2K for her).
Using 20% as the amount you need to report in Canada, you would report $20K of income, but your eligible tax would come to $2000 (20% of the $10K which is attributed to your income) plus $2400 FICA (20% of 12K)
Example. You made $100K and she made $20K. Your total fed/state tax was $12K, and your FICA was $12K. her fica is irrelevent. The 12K of tax would be prorated between her and you (10K for you, 2K for her).
Using 20% as the amount you need to report in Canada, you would report $20K of income, but your eligible tax would come to $2000 (20% of the $10K which is attributed to your income) plus $2400 FICA (20% of 12K)
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Below are my information just based on income and taxes deducted (from W2 slips). I excluded all charitable contributions and professional membership deductions to make it simpler.
My information:
Income plus 401k = $73K
Fed + State + FICA paid = $19.8K
Wife:
Income for all of 2007 = $69K
Fed + State + FICA paid = $19.4K
Ran ufile with the information above excluding the taxes plus FICA paid from my wife. The result shows $0 taxes payable for me and $17.2K for my wife (because of the exclusion of taxes plus FICA paid). I put the date of entry into Canada as of Jan 1/2007.
I than ran ufile with the information above taking using only 51% proration of the taxes paid plus FICA for myself only (deduction of $10.2K). Again assuming I was in Canada as of Jan 1/2007 My taxes owing is now $7.8K.
I ran ufile with a third scenario using 20% of income and 20% of the prorated taxes and FICA ($10.2K). The 20% was the portion of the year I was a Cdn resident. I did not take a spousal deduction to keep this scenario consistent with the 2nd scenario. Taxes owing is now $536.10.
Based upon my information above, am I doing something wrong? I am confused as to why I need to split out my taxes paid and FICA between my wife and myself?
My information:
Income plus 401k = $73K
Fed + State + FICA paid = $19.8K
Wife:
Income for all of 2007 = $69K
Fed + State + FICA paid = $19.4K
Ran ufile with the information above excluding the taxes plus FICA paid from my wife. The result shows $0 taxes payable for me and $17.2K for my wife (because of the exclusion of taxes plus FICA paid). I put the date of entry into Canada as of Jan 1/2007.
I than ran ufile with the information above taking using only 51% proration of the taxes paid plus FICA for myself only (deduction of $10.2K). Again assuming I was in Canada as of Jan 1/2007 My taxes owing is now $7.8K.
I ran ufile with a third scenario using 20% of income and 20% of the prorated taxes and FICA ($10.2K). The 20% was the portion of the year I was a Cdn resident. I did not take a spousal deduction to keep this scenario consistent with the 2nd scenario. Taxes owing is now $536.10.
Based upon my information above, am I doing something wrong? I am confused as to why I need to split out my taxes paid and FICA between my wife and myself?
Sorry, I misread your message. Wife paid US Fed and State taxes of $14.1K. Add to the Fed + State + FICA that I paid and the total US taxes would be $33.9K total. Using the 51% proration, the deduction I can use for taxes paid is $17.3K.
Running ufile, I get this result: 20% residency - $0 Cdn taxes payable
Full year 2007 residency - $1,763 payable.
Does that sound right?
Running ufile, I get this result: 20% residency - $0 Cdn taxes payable
Full year 2007 residency - $1,763 payable.
Does that sound right?
You can't use the W-2 to determine taxes, you MUST use your return calculated amounts. And the proration is based on income. Your fica is not divvied: your is your and hers is hers.
Your numbersa re getting more realistic however.
So you need to decide if it worth the extra $2000 to be a Cdn resident.
Your numbersa re getting more realistic however.
So you need to decide if it worth the extra $2000 to be a Cdn resident.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Thanks again for setting me straight. I must be experiencing a brain cramp thinking what they deducted from the W2 was what I paid in taxes. Probably going to bite the bullet and just declare myself a resident of Canada. At the very least, I can start building that RRSP deductions for 2009. Just a few more questions and I should be done:
1) For the T1 General, do I use my wife's Cdn address or should I use my US address for my return?
2) For the 2007 taxes, should I only be sending my W2 and 1040 to CRA? Or should I be including my wife's W2 as well?
3) On the T1 General, it ask for my spouse's income. Should I put in $0 (Cdn income) or the $69K US income? Would it cause any issues with my wife's T1 if I put in the US income? She would be using $0 income for her T1 return.
4) For my wife's Cdn resident status, is she a Cdn resident when she establishes Cdn resident ties (IE. Obtains Provincial Health coverage), or when she physically arrives in Canada?
Thanks so much!!!
1) For the T1 General, do I use my wife's Cdn address or should I use my US address for my return?
2) For the 2007 taxes, should I only be sending my W2 and 1040 to CRA? Or should I be including my wife's W2 as well?
3) On the T1 General, it ask for my spouse's income. Should I put in $0 (Cdn income) or the $69K US income? Would it cause any issues with my wife's T1 if I put in the US income? She would be using $0 income for her T1 return.
4) For my wife's Cdn resident status, is she a Cdn resident when she establishes Cdn resident ties (IE. Obtains Provincial Health coverage), or when she physically arrives in Canada?
Thanks so much!!!
Hi Nelsona,
I wanted to thank you again for all the advice and patience you've exhibited in your replies. I've completed all the tax paperwork and sent it up to Canada declaring myself as a resident of Canada. Keeping my fingers cross that CRA would not question anything aside from questioning why my wife did not file a departure return back in 2002 (we were not married back then). She was a student in the U.S. from 1998-2002 and then worked in the States after graduation. I believe based on the residency rules, she should have no issues defending her non residency if CRA questions it. She also had nothing of value when she graduated so there was no deemed disposition. Do you foresee any issues with my wife not filing a departure return in 2002 with CRA? Thanks.
I wanted to thank you again for all the advice and patience you've exhibited in your replies. I've completed all the tax paperwork and sent it up to Canada declaring myself as a resident of Canada. Keeping my fingers cross that CRA would not question anything aside from questioning why my wife did not file a departure return back in 2002 (we were not married back then). She was a student in the U.S. from 1998-2002 and then worked in the States after graduation. I believe based on the residency rules, she should have no issues defending her non residency if CRA questions it. She also had nothing of value when she graduated so there was no deemed disposition. Do you foresee any issues with my wife not filing a departure return in 2002 with CRA? Thanks.