401K (non RC-26X deduction) + Double Moving Expenses Claim

[canadiantn1]

Hi nelsona. You're a genius and I desperately need your help.

Background: moved to California/US Jul 5 (only 180 days in US), do not commute to US nor work in Canada, met sig presence test, have Canadian bank accounts/cards, have health care extension in Canada until 2017, don't own Canadian residence, living in apartment in US, single, filing 1040NR under closer connection to Canada, parents have residence in Canada, normal IT job, made 401K contributions and have employee match.

A few specific questions:

0) On my T1 Gen, do I list my US residence? (in ident, info about residence)
1) 401K: I took the total of my W2's YTD earnings (note: 401K was never subtracted nor included) and put it on T1's line 104. I don't have to "add it" as income, right?
2) 401K: Where do I claim my 401K contribution + match? (those RC-267,RC-268,RC-269 forms don't apply to me). Line 232 (transfer to RPP or Tax Treaty Exempt Amount - line 256? Don't I ignore the match (it's not something used in my US returns and I didn't pay it).
3) 1040NR: Income exempt from Tax - do I use Canadian tax treaty articles XXIV, IV, IX and list my Canadian income? What's the best article in my case?
4) Can I claim the same moving expenses on both of my US and Canadian returns?
- i.e. yes, I moved from Canada to the US (Canadian return)
- i.e. yes, I moved to the US from Canada (US return)
a) While I "ordinarily reside" in the US, can I still claim a "closer connection" to Canada?
5) This year I should be spending 183+ days / 6+ full-months in the US. Do I still file a 1040NR at the end of year or switch to 1040? Would I have to close Canadian bank accounts/credit cards? Is it advantageous to keep doing the 1040NR exercise - keep claiming a connection and pay less in taxes?
6) 1040NR: state and local taxes: does that equal regular state income + SDI?
7) Foreign tax credit:
- That's the sum of Fed+SS+Med+State+SDI, right?
8) US Sales Tax: going to be bigger than state income tax - bought a car. I just total the big expenses put them on my state 540NR (long), right?

Your help is greatly appreciated!

[canadiantn1]

[quote="canadiantn1"]Hi nelsona. You're a genius and I desperately need your help.

Background: moved to California/US Jul 5 (only 180 days in US), do not commute to US nor work in Canada, met sig presence test, have Canadian bank accounts/cards, have health care extension in Canada until 2017, don't own Canadian residence, living in apartment in US, single, filing 1040NR under closer connection to Canada, parents have residence in Canada, normal IT job, made 401K contributions and have employee match.

A few specific questions:

0) On my T1 Gen, do I list my US residence? (in ident, info about residence)
1) 401K: I took the total of my W2's YTD earnings (note: 401K was never subtracted nor included) and put it on T1's line 104. I don't have to "add it" as income, right?
2) 401K: Where do I claim my 401K contribution + match? (those RC-267,RC-268,RC-269 forms don't apply to me). Line 232 (transfer to RPP or Tax Treaty Exempt Amount - line 256? Don't I ignore the match (it's not something used in my US returns and I didn't pay it).
3) 1040NR: Income exempt from Tax - do I use Canadian tax treaty articles XXIV, IV, IX and list my Canadian income? What's the best article in my case?
4) Can I claim the same moving expenses on both of my US and Canadian returns?
- i.e. yes, I moved from Canada to the US (Canadian return)
- i.e. yes, I moved to the US from Canada (US return)
a) While I "ordinarily reside" in the US, can I still claim a "closer connection" to Canada?
5) This year I should be spending 183+ days / 6+ full-months in the US. Do I still file a 1040NR at the end of year or switch to 1040? Would I have to close Canadian bank accounts/credit cards? Is it advantageous to keep doing the 1040NR exercise - keep claiming a connection and pay less in taxes?
6) 1040NR: state and local taxes: does that equal regular state income + SDI?
7) Foreign tax credit:
- That's the sum of Fed+SS+Med+State+SDI, right?
8) US Sales Tax: going to be bigger than state income tax - bought a car. I just total the big expenses put them on my state 540NR (long), right?

Your help is greatly appreciated![/quote]

Yeah, I have a TN-1 Visa.

[nelsona]

Too many questions: you are a departing Cdn resident, and should read the emigrant guide on CRA website. You should not file 1040NR, as this penalizes you. You should file 1040 ful year, as I have explained many places here.

As such, you will not have to report your US income on your Cdn departure return, so 401(k) issues dssappear. Also, your moving expenses only appear on your US return, since you cannot claim moving expense for leaving Canada.

You've got the state income and state sales tax all mixed up, and you should be filing as a Cali resident.

You'll have to correct all these NR forms to make them residnet forms. There is no way you are a Cdn resident, neiuther in fact, nopr by treaty.

[canadiantn1]

Can you please elaborate?

In order to be a California resident, I have to spend by definition, 6 FULL months in California - instead, I've spent 5 FULL months and most of the remaining month, save for 5 days (was not in US from July 1-4). Tax experts have told me that I'll likely need to file a 1040NR this year, and a 1040 next year.

If I have two Canadian credit cards and a bank account active + health care, how does that suggest I didn't cut ties to Canada? Now I did meet the significant presence test - are you saying I should deny that I have a close connection to Canada? California taxes are pretty high - I thought the 1040NR approach would have been better?

I don't have to correct NR forms - the software I used just lets me fill non-NR forms and I was going to reuse the data electronically.

Please help.

[nelsona]

Tax experts? Really? They don't know about treaties, nor about elections you can make for the first year, so let's drop the "expert" please.

You do NOT want to be considered a Cdn resident -- you simply do not live there. Read the emigrnats guide from CRA. Besides, the treaty allows you to file 1040 at all times, regardless of canadian ties. You want this. Its better than 1040NR unless you moved in November or december.

Whether or not you live in Cali, you will pay cali taxes on income earned ther, that's how the US system works. You are a part-year residnet of Cali. If that means filing a 540NR, maybe (i avoid the various flavours of each state), but fedarally, since you met SPT, you cannot file 1040NR for the whole year (so much for experts), so you had best file 1040 for the whole year, reporting all income wordlwide, and getting all the deductions credits etc that 1040 gets, that 1040NR doesn't get.

You've come here quite earlt in the tax season, so you've got plenty of time to fix all this before April.