birdsleeps

Hi, I have questions about my residence status. I moved to U.S. with a
K1 and I got married last month. I have already filed the AOS to INS.
My question is do I have to declare non residence in Canada, and when
shall I do that? For the following Tax return, I will have to complete
the Canadian Tax Return since I was in Canada from Jan -November 2006.


Do I need to do the U.S. Tax return also? In other words, it means my
husband will have to file it for me since we are married, since his
marital status has changed. How will that affact his tax return?



Thanks

dakota44

I think you only need to be concerned about filing your Canadian return. If you have had no income in the U.S., you should not need to file a return there, but your husband can claim you on his return. As for residence, your residence in the U.S. will be implied by the U.S. tax return.

U.S. citizens are required to file a return no matter where they live. I live in Canada and file, but I file a form 2555EZ to exclude foreign earned income from U.S. tax. You, however, are not a U.S. citizen and should not have to report your Canadian income for the time when you lived there and not in the U.S.

But, for your own peace of mind, and to be certain whether my suggestion is correct or not, call the local IRS office. They can be very helpful.

ian-mstm

You must file a Canadian return for the year 2006. With the return, attach a letter indicating that you have moved to the US, that you will no longer be resident for tax purposes in Canada, and that you will not be filing any further Canadian tax returns.


I'm pretty sure that when your husband's marital status changed, yours did also!

Ian

dakota44

I do not totally agree with statement one. There are circumstances where she would be required to file a Canadian return, no matter where she lives, and to simply say "tell them you will not be filing any further Canadian tax returns" is bad advice. http://www.cra-arc.gc.ca/tax/nonresi...ls/menu-e.html

on number two: Her husband files as "married" in the U.S. and takes the spousal deductions.

ian-mstm

You're right... I should have been more precise. This is what *I* did when I left Canada and, like the vast majority of those who enter the US as a K-1 beneficiary, *I* no longer file Canadian tax returns.


I wasn't really talking about any sort of paperwork. You must be really stressed because you usually have a great sense of humor!

Ian

dakota44

Oh I am definitely stressed.

didn't intend to sound gruff.

I'm not sure if Canada treats citizens the same as the U.S. does its citizens..as per requiring them to file returns no matter where they live.

But it seems that if there is any income generated in Canada, a return is required. Things like rental income, interest income, cpp etc.

There is someone on this board that commented... on a thread I had posted on... about their need to file in both countries for some of those reasons. Just don't remember who it was. and now for another....

Rete

Being the wife of a Canadian who also immigrated here through a K-1 and who has dual income from both the US and Canada, I can give you his or rather our experience.

Jim did not have to do anything about requesting non-residency in Canada as the then Revenue Canada sent him the paperwork a few months after migrating. Apparently the spy system works between our countries and the left does tell the right hand what it is doing.

If you have continuing income in Canada by all means go through the Canadian Revenue (whatever it is called now) and request the paperwork to be sent to you. After your completion of the paperwork and return to them they will let you know their decision. There is a likelihood that they will consider you a resident even if you aren't. It is their call.

As for taxes, the amount I believe at the present moment tax free for Canadian income by the US IRS is $80,000. In other words you can have income of $80,000 or under from Canada and as long as you have paid taxes on that in Canada, it is placed on your US 1040 form and then written off before US taxes are figured out. The amount of US dollars earned are less if you are going the reverse route and migrating from the US to Canada.

Now as to US taxes, if you have no earned income from the US you don't have to file your independent return. You have nothing to declare. HOWEVER, since you are married you would file joint instead of married, separate, and your husband will earn a higher deduction rate for such category of filing.

There is absolutely nothing to worry about and no hidden rules or regulations here and please, do let others make you frightened of our tax structure. Other than the tax you have to pay, the forms are super easy to understand and complete.

dakota44

I believe that applies for earned income, wages and salaries (probably includes pensions too, but not sure), you cannot have self employment income, are not claiming foreign housing exclusion, do not have business and moving expenses. It also does not, as I recall, include passive income (income not earned from wages or salaries).

It also requires that you declare, and prove if required, a residence in Canada (referred to by the IRS as a tax residence) and you must have spent at least 330 days of the year there. Days spent in the U.S exceed 35? You don't qualify..according to the form 2555 for foreign earned income exclusion.
However, you can then file a different tax return where you are allowed to make some deductions for foreign tax paid, within limitations.

Rete

Yes, it includes pensions. Never had an issue with it in either country in nine years.

As for the physical presence test, suggest the OP take the test. If memory serves me right, Jim emigrated August 18, we married September 26 and he was still passed the physical presence test for IRS and had absolutely no problems with Revenue Canada or the IRS tax returns.

We have never filed for foreign tax deductions for taxes paid in Canada.

BTW we have an accountants in both countries who do our taxes so it is not just what we muddled through but what a professional in that area did for us.

Rete

PS I don't believe they are referring to a calendar year.

dakota44

Who Qualifies

You qualify for the tax benefits available to taxpayers who have foreign earned income if both of the following apply.

*

You meet the tax home test (see below).
*

You meet either the bona fide residence test (see page 2) or the physical presence test (see page 2).

Note. If your only earned income from work abroad is pay you received from the U.S. Government as its employee, you do not qualify for either of the exclusions or the housing deduction. Do not file Form 2555.

Tax home test. To meet this test, your tax home must be in a foreign country, or countries (see Foreign country, later), throughout your period of bona fide residence or physical presence, whichever applies. For this purpose, your period of physical presence is the 330 full days during which you were present in a foreign country, not the 12 consecutive months during which those days occurred.

Your tax home is your regular or principal place of business, employment, or post of duty, regardless of where you maintain your family residence. If you do not have a regular or principal place of business because of the nature of your trade or business, your tax home is your regular place of abode (the place where you regularly live).

You are not considered to have a tax home in a foreign country for any period during which your abode is in the United States. However, if you are temporarily present in the United States, or you maintain a dwelling in the United States (whether or not that dwelling is used by your spouse and dependents), it does not necessarily mean that your abode is in the United States during that time.


Bona Fide Residence Test

To meet this test, you must be one of the following:

*

A U.S. citizen who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1-December 31, if you file a calendar year return), or
*

A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty in effect and who is a bona fide resident of a foreign country, or countries, for an uninterrupted period that includes an entire tax year (January 1-December 31, if you file a calendar year return). See Pub. 901, U.S. Tax Treaties, for a list of countries with which the United States has an income tax treaty in effect.

No specific rule determines if you are a bona fide resident of a foreign country because the determination involves your intention about the length and nature of your stay. Evidence of your intention may be your words and acts. If these conflict, your acts carry more weight than your words. Generally, if you go to a foreign country for a definite, temporary purpose and return to the United States after you accomplish it, you are not a bona fide resident of the foreign country. If accomplishing the purpose requires an extended, indefinite stay, and you make your home in the foreign country, you may be a bona fide resident. See Pub. 54 for more information and examples.
Lines 13a and 13b. If you submitted a statement of nonresidence to the authorities of a foreign country in which you earned income and the authorities hold that you are not subject to their income tax laws by reason of nonresidency in the foreign country, you are not considered a bona fide resident of that country.

If you submitted such a statement and the authorities have not made an adverse determination of your nonresident status, you are not considered a bona fide resident of that country.


Physical Presence Test

To meet this test, you must be a U.S. citizen or resident alien who is physically present in a foreign country, or countries, for at least 330 full days during any period of 12 months in a row. A full day means the 24-hour period that starts at midnight.

To figure the minimum of 330 full days, add all separate periods you were present in a foreign country during the 12-month period shown on line 16. The 330 full days can be interrupted by periods when you are traveling over international waters or are otherwise not in a foreign country. See Pub. 54 for more information and examples.
Note. A nonresident alien who, with a U.S. citizen or U.S. resident alien spouse, chooses to be taxed as a resident of the United States can qualify under this test if the time requirements are met. See Pub. 54 for details on how to make this choice.

from here: http://www.irs.gov/instructions/i2555/ch02.html

Rete

BINGO! Also included with the first US tax return is a note that you wish to considered as a US Resident for tax purposes.

dakota44

which does not change the requirements for excluding foreign income. It simply means that the spouse of a USC can elect to file in the same manner as a USC....including meeting the 330 day requirement and income specifics for foreign earned income. The spouse would need to follow the same tax law as the USC in that regard. http://www.irs.gov/pub/irs-pdf/p54.pdf

Rete

Never said it did.

dakota44

OK..I'm confusing myself now. lol peace.