Keeping Green Card but filing 1040NR and 8833?
I've had a GC for 20 years but moved back to Canada 3 years after obtaining GC. In 2007 I changed to 'commuter status" GC.' I've been filing 1040s each year using my Canadian address as my residence and have had no residence in the US. I've also been filing taxes in Canada each year and offsetting double taxation with tax treaty.
My question is -- can I begin fling 1040NR (with a 8833 is necessary for 2010 tax year) and keep my GC?
I know that one option is to surrender the GC and file a dual status return. But, I'd like to look into the option of keeping the GC, filing 1040NR and being treated as a Canadian resident under treaty tie breaker rules? Is this possible?
Thanks!!
Filing 1040NR, keeping Green Card and living in Canada?
Moderator: Mark T Serbinski CA CPA
There are a few brave souls that file in this manner, and have not had their GC challenged, nor their returns rejected.
And these are ones with "real" GCs, which require maintaining a US presence.
Your commuter GC makes this option even more possible, since it is by definition a GC held by a foreign resident.
The treaty is pretty clear that if you live in canada you are a Cdn tax resident by the taie-breakers. And non-US residents can file 1040NR.
Is there a particular reason for wanting to do this,say, in a particular year (since your US employemnt income is still primaril;y taxable in US)?
And just so we are being accurate, you are offsetting double taxation merely by the rules of CRA and IRS. You are not relying on the treaty for this (unless you have some form of US-based income other than earned income)
And these are ones with "real" GCs, which require maintaining a US presence.
Your commuter GC makes this option even more possible, since it is by definition a GC held by a foreign resident.
The treaty is pretty clear that if you live in canada you are a Cdn tax resident by the taie-breakers. And non-US residents can file 1040NR.
Is there a particular reason for wanting to do this,say, in a particular year (since your US employemnt income is still primaril;y taxable in US)?
And just so we are being accurate, you are offsetting double taxation merely by the rules of CRA and IRS. You are not relying on the treaty for this (unless you have some form of US-based income other than earned income)
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Thanks so much Nelsona . . .
When I file a dual status return for tax year 2010 should I also file form 8833 to disclose a treaty based return position? Would there also be a requirment to file 8854 'expatriation information statement?"
I note that the 8854 is only required if one is a long term resident (8 years of the last 15 years) of US. The instructions say ".. do not count any year you were treated as a resident of a foreign country under a tax treaty and did not waive treaty benefits applicable to residents of the country."
Even though I have had a GC for 20 years or so I have not lived in the US for any one of the past 15 years and have always paid taxes in Canada as a resident. (I have also filed 1040s each year using my Canadian address).
Is it possible for someone to be a GC holder but not a LPR or LTR?
Filing 1040NR with 8833 seems like a better option -- in my particular circumstances -- than surrendering the GC with I-407. Would I cease to be a resident for tax purposes upon filing 1040NR dual resident return just as I would if I surrendered GC?
When I file a dual status return for tax year 2010 should I also file form 8833 to disclose a treaty based return position? Would there also be a requirment to file 8854 'expatriation information statement?"
I note that the 8854 is only required if one is a long term resident (8 years of the last 15 years) of US. The instructions say ".. do not count any year you were treated as a resident of a foreign country under a tax treaty and did not waive treaty benefits applicable to residents of the country."
Even though I have had a GC for 20 years or so I have not lived in the US for any one of the past 15 years and have always paid taxes in Canada as a resident. (I have also filed 1040s each year using my Canadian address).
Is it possible for someone to be a GC holder but not a LPR or LTR?
Filing 1040NR with 8833 seems like a better option -- in my particular circumstances -- than surrendering the GC with I-407. Would I cease to be a resident for tax purposes upon filing 1040NR dual resident return just as I would if I surrendered GC?
You would file the 8833.
The expat issueis a little more complicated. On another website, I had discussed this, and I concluded that your date of expatraition would be the first year you filed 1040NR and 8833 AND DID NOT SUBSEQUENTLY FILE 1040. So, if this would be the first year you do this, then 2010 would be your expat year, and you would be unfder the current expat rules, regardless of the fact that you left US as a residnt long ago. (the person I was discussing that had been filing 1040NR/8833 for many years).
Giving up GC is another issue. If you have a commuter GC but no US employer, then your commuter GC is no good anymore (within 6 months). If you've given up having GC, you might as well submit the I-407.
But, what I was asking you was if you felt there was a particualr taxation issue whereby you felt filing a 1040NR was in some way saving you overall taxation.
The expat issueis a little more complicated. On another website, I had discussed this, and I concluded that your date of expatraition would be the first year you filed 1040NR and 8833 AND DID NOT SUBSEQUENTLY FILE 1040. So, if this would be the first year you do this, then 2010 would be your expat year, and you would be unfder the current expat rules, regardless of the fact that you left US as a residnt long ago. (the person I was discussing that had been filing 1040NR/8833 for many years).
Giving up GC is another issue. If you have a commuter GC but no US employer, then your commuter GC is no good anymore (within 6 months). If you've given up having GC, you might as well submit the I-407.
But, what I was asking you was if you felt there was a particualr taxation issue whereby you felt filing a 1040NR was in some way saving you overall taxation.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
... and why would you fil dual status. what specific incidfent would you point to that would make you US resident one day and not the next. You are electing to be treated like a non-resident for the entire year.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
My understanding was that surrendering GC and filing I-407 would require a dual status return for that tax year -- based on the date GC was surrendered. I would then become taxable only in Canada and would no longer work in the US.
The other option, filing 1040NR and 8833, would seem to have the same end result. Only difference would be that I'd still have the GC. But, would I not also have to file a dual status return to reflect a change in status during tax year 2010 when I took treaty election.
I don't have any specific reason for doing so this year - next year would work just as well -- and taxes are higher in Canada anyway so there's no tax savings to consider. My work in the US has been slowing down and may end within 1-2 years. But, it would be easier and less expensive in fees to just file Canadian tax and 1040NR rather than CDN and 1040 returns etc.
Is the option of claiming tax treaty with 8833, and I suppose also submiting a 8854 expat info form (I am well below covered threshold levels) a workable and valid way to begin filing 1040NRs while keeping my GC a little longer?Or, would this not be the way to go?
Thanks again for the advice . . .
The other option, filing 1040NR and 8833, would seem to have the same end result. Only difference would be that I'd still have the GC. But, would I not also have to file a dual status return to reflect a change in status during tax year 2010 when I took treaty election.
I don't have any specific reason for doing so this year - next year would work just as well -- and taxes are higher in Canada anyway so there's no tax savings to consider. My work in the US has been slowing down and may end within 1-2 years. But, it would be easier and less expensive in fees to just file Canadian tax and 1040NR rather than CDN and 1040 returns etc.
Is the option of claiming tax treaty with 8833, and I suppose also submiting a 8854 expat info form (I am well below covered threshold levels) a workable and valid way to begin filing 1040NRs while keeping my GC a little longer?Or, would this not be the way to go?
Thanks again for the advice . . .
Nelsona,
Perhaps there's no reason to file a dual status return. I suppose the correct thing to do would be to file 1040NR with 8333 to cover all of 2010. The 8854 expat info statement would be checked 'long-term resident with dual residency in a treaty country' swith Jan 1, 2010 as the date commencing to be treated as a resident of a treaty country?
Would this be a correct procedure? When my work does stop in the US - a year or 2 from now - I could then turn in the GC?
Perhaps there's no reason to file a dual status return. I suppose the correct thing to do would be to file 1040NR with 8333 to cover all of 2010. The 8854 expat info statement would be checked 'long-term resident with dual residency in a treaty country' swith Jan 1, 2010 as the date commencing to be treated as a resident of a treaty country?
Would this be a correct procedure? When my work does stop in the US - a year or 2 from now - I could then turn in the GC?
Filing 8833 and 1040NR does not require surrendering of GC, so there is no need for dual status return.
Once you surrender GC, there is no need for 8833 of course.
The question is why bother with this if you are going to give up GC anyways. Surely by now you could do your taxes using last years return.
Once you surrender GC, there is no need for 8833 of course.
The question is why bother with this if you are going to give up GC anyways. Surely by now you could do your taxes using last years return.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
No. The treaty position being taken merely covered the tax residency and the manner of filing.
World income of course would not be reported (as 1040NR requires only US-sourced income -- that is the whole point).
However trust, 8891, FBAR, etc are still required, according to what I have read.
World income of course would not be reported (as 1040NR requires only US-sourced income -- that is the whole point).
However trust, 8891, FBAR, etc are still required, according to what I have read.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
"Looks to me that you can avoid declaring world income if you file a 1040NR instead of a 1040."
Of course, that is what I've said all along. This will not save you any overall tax however, except in narrow circumstances. and you are opening your self up for a claim that your (non-commuter) GC has been abandonned.
Remember that if you have kids, IRS actually pays you $1000/child by filing a 1040 (but not 1040NR), so you might consider this.
I would only suggest using it when you can actually prove to yourself that you are having to pay more US tax than you can clim on your Cdn return ,and no othe remedies exist (such has income re-sourced by treaty).
The ONLY case I can think of is if you have a Cdn principal residnce that has increased beyond the US exemption for cap gains. And this might still be caught in the expat tax net.
Can you think of any other? I've not found other such situations in 10 years.
Of course, that is what I've said all along. This will not save you any overall tax however, except in narrow circumstances. and you are opening your self up for a claim that your (non-commuter) GC has been abandonned.
Remember that if you have kids, IRS actually pays you $1000/child by filing a 1040 (but not 1040NR), so you might consider this.
I would only suggest using it when you can actually prove to yourself that you are having to pay more US tax than you can clim on your Cdn return ,and no othe remedies exist (such has income re-sourced by treaty).
The ONLY case I can think of is if you have a Cdn principal residnce that has increased beyond the US exemption for cap gains. And this might still be caught in the expat tax net.
Can you think of any other? I've not found other such situations in 10 years.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Just to be clear on this -- if I file 1040NR and 8333 am I considered to have expatriated even though I still possess a GC?
I would prefer to expatriate now rather than in the future. If I expatriate now I am current on all US tax filings and I am well below the 'covered' limit (in terms of net worth and past 5 yrs income tax payment amonts) on 8854 and 877A.
If I wait a few years to expatriate -- until GC is surrendered at some point in future -- I may find myself in a 'covered' category and have a requirement for 10 yrs of additional filings under 877A/8854.
I'd prefer to expatriate with 1040NR and 8833 now and then turn in the GC when mhy work in the US fizzles out in 2-3 years. My only concern is if I keep the GC will I still be considered to have expatriated in 2010 based on 1040NR and 8833 filings.
I would prefer to expatriate now rather than in the future. If I expatriate now I am current on all US tax filings and I am well below the 'covered' limit (in terms of net worth and past 5 yrs income tax payment amonts) on 8854 and 877A.
If I wait a few years to expatriate -- until GC is surrendered at some point in future -- I may find myself in a 'covered' category and have a requirement for 10 yrs of additional filings under 877A/8854.
I'd prefer to expatriate with 1040NR and 8833 now and then turn in the GC when mhy work in the US fizzles out in 2-3 years. My only concern is if I keep the GC will I still be considered to have expatriated in 2010 based on 1040NR and 8833 filings.
If you file 1040NR and 8833 (and 8854) in 2010, and never again file 1040 while in possession of your GC, you will have expatriated in 2010.
Paradoxically, once you have given up your GC, you could very well resume filing 1040, if this benefits you (when you get US-sourced pensions for example), and this would not undo your expatriation. Filing 1040 is a treaty right for Cdns.
Another thing to consider is that you know the current rules, who knows how they will change? Depending on the mood of congress, they could make them harsher again. If you are going to exaptraite, now would seem a better time than in future.
Paradoxically, once you have given up your GC, you could very well resume filing 1040, if this benefits you (when you get US-sourced pensions for example), and this would not undo your expatriation. Filing 1040 is a treaty right for Cdns.
Another thing to consider is that you know the current rules, who knows how they will change? Depending on the mood of congress, they could make them harsher again. If you are going to exaptraite, now would seem a better time than in future.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing