Re: dual residency & Taxes
 

HI,
My wife and I moved as a PR to Canada last April 2005 from US. Our landing was in Dec 2004.

Now that it is tax season in Canada and US, I know that you have to file taxes in both places.

1. In the Canada taxes, do I need to report the US taxes for Jan-Apr 2005?

2. Do I need to report the Canada income in the US tax return?

Thanks,
-Aspirant.

Re: dual residency & Taxes
 

Both Canadian residents and US residents must report their world-wide income.

Due to the US-Canada tax treaty, whatever tax you pay to one country you can claim as an income tax deduction in the other country. Ergo, you will want to report any US income taxes paid you paid on your Canadian return. This avoids double taxation. You only report income to Canada from the time they consider you to be resident in Canada.

You need profession advice from a tax accountant.

Re: dual residency & Taxes
 

This thread is closed as it dates from 2002. Aspirant, you can start a new thread if you need any more info in addition to what OceanMDX has given you.

Biiiiink

Re: dual residency & Taxes
 

Thread reopened by Rete without permission from Biiiink ... hope I didn't step on your toes .... and if I did, I promise I am lightfooted.

Re: dual residency & Taxes
 

Not sure what you are saying here Ocean.

My Canadian husband has to claim his income from his Canadian pension on his US taxes. It is entered and then written off without having to pay dual taxes on it. However, he cannot claim the taxes paid in Canadian as a deduction on his US tax return which is how I read your post.

Re: Canadian Taxes .. Split Thread from Aspirant2000
 

^^^ You're looking at it from the opposite perspective - as a US resident with some Canadian income. I was looking at the issue from the perspective of a Canadian resident with some US income (i.e. from the poster's perspective).

Since your husband isn't a resident of Canada does he pay a withholding tax to Canada on this pension payments? If so, that may explain why he pays no US income tax on that money (i.e. Canada has already charged a rate that exceeds this marginal tax rate in the US). Otherwise, what does he "right it off" against? One of the purposes of tax treaties is to avoid double taxation, so I agree that he doesn't have to pay taxes twice on this pension income. It's a question of mechanics figuratively speaking. There isn't any question that any tax he pays to Canada (income tax) is deducted from what he owes to the US - in one way or the other - that's why we have the tax treaty.

Re: Canadian Taxes .. Split Thread from Aspirant2000
 

Yes he pays Canadian taxes on his military pension.

Write it off ;-)

On the IRS 1040 you "write in" the amount of earned Canadian income and then before taxes are calculated you "write off" the same amount. There is another form for this that our accountant completes and includes with our filings. The money earned is to be reported but yes, there is no double taxation on earned income less than $80,000.

Re: Canadian Taxes .. Split Thread from Aspirant2000
 

This issue that you are describing is particular to the US - not to Canada. In the US, they have the " Foreign Earned Income Exclusion" (up to a prescribed amount). Your husband and his income have to qualify for this beneficial tax treatment. From what I understand, pension income doesn't qualify and he can't be a resident of the US to qualify either! It is for those people who file US income taxes that earn foreign income while residing in that country (i.e. not resident in the US).

Read this:

http://www.finetuning.com/articles/p...-purposes.html

http://www.irs.gov/publications/p54/ch04.html

Re: dual residency & Taxes
 

Not at all!! You'll need to show me the secret "split thread" button - I haven't found that one yet :D