Error in filing Canada return and correction

[NewCanadian]

This is my first post. Reading old posts is although a wealth of information- a little too much of overdose in a short time.

Here is my case.

Came to US on TN in Dec 08 during peak of recession. Family stayed in Ontario. Got $ 9000 income in 2008 in US. Filed 1040NR but did not report on Canada return under wrong impression that less than 10K in a year income is exempt under treaty. I now understand that it should have been added to Canada income and reduced on line 256. Is that correct or incorrect again?

Family moved to US after living first quarter in Ontario. I was considering myself as Ontario resident until family moved but when I read IT-221R3 which gives me possibility of deemed non resident due to my vital interest was in US in 2009 due to away by 2000 kms from home & I Didnot make many or long trips to Canada.

I got 40,000 in salary in first quarter of 2009 and company paid moving benefits 40,000 - a total of 80,000 during same period while family in Ontario- All of which can be taxable if I am considered resident.

My question is my interpretation of DNR has some possibility of contesting and are there any options for appeal if CRA takes a different stand when I file my part year residence return?

I think correcting Canada return would be step 1 in that direction.

[nelsona]

Your interpreation of how the $10K exemption works is reversed.

If you earn less that $10K of wages in the country which you are NOT resident, then it is not taxable in THAT country. It is always taxable in your Country of residence.

So, for 2008, when you still considered yourself residnt of Canada, the wages were not taxable IN US, because of being less than $10K US. They were taxable in canada.

In my opinion, you became US resident in Dec 2008and should have filed as such.

At this point though, I would be filing as non-resident (DNR, whichh is tghe same thing) form Jan 01, 2009. make sure you comply with ALL departure and non-resident requirements.

[NewCanadian]

Hello Nelsona,
Thanks a lot.

I realized my error in 2008 Canada return filing and want to correct it ASAP. I pulled my Quick tax file and have follow up questions.

1) I have some unused RRSP in 2008 which I can use to reduce part of increase in taxable income. Is that allowed?

2) I had transferred tuition & education amount from my university studying son. Is that allowed for partial year or I have return it back to him?

3) What are the implications of rental income for first 6 months when I was deemed non resident and my wife was resident. Do I have to pay penalty for not pay 25 % gross rent tax?

3) What is involved in filing of Deemed non resident return for 2009. Is it that I have to complete return or just send copy of my 1040 and W2 for CRA information?

Sorry if my questions sound are too elementary.

[nelsona]

Have your wife report the income.

Your don't file anything if you are non-resident, unless you have Cdn income. Rent goes on a 216 return.


I'm closed for the tax year folks.

[NewCanadian]

Hello Nelsona,
I have gone through most of your posts in this forum and trying to assimilate lot of useful information.

You mentioned some posts that Canadian by treaty can file 1040 for full year irrespective of number days in US. Is my paraphrasing correct? If so, when I was in US for one month in Dec 08, I could have filed full year 1040 whereas I filed 1040NR.

Thanks

[nelsona]

You could have, but I'nm sure the tax you calculated on 1040NR was so ssmall, that it would be pointless to correct.