Filing taxes in Canada after moving mid-year from the US on H1-B status

#1

Wondering if anyone here has experience with filing taxes in Canada after moving mid-year on H1-B status. Yes, I could pay a tax consultant potentially, but finding one who knows the details and doesn’t charge an arm and a leg seems tricky.

Would love to know what your considerations when filing taxes were - It looks like the easiest would be to file Canadian taxes first, and then subsequently use the foreign tax credit as a tax credit on the US return, since that is easier than the foreign earned income exclusion which requires filing an extension since you need to meet the 330 days of foreign (non US) presence in a 12 month period. In addition, it also looks like the CRA would also like a form to mention anything prior Roth IRA balances, to ensure that it stays tax exempt in Canada as well. ( Don’t see any such equivalent for a 401k, but this seems to make sense since your withdrawals on the 401k will get taxed anyway ). The one other thing that’s slightly unclear is how taxation works on stock that has been acquired in the US on H1-B, but hasn’t yet been sold.

Anything fundamental that I’m missing here?

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#2

I have same question. Can someone please repply?

#3

Yeah - have some experience now :slight_smile:

If you move mid-year, your best bet for US taxes is probably to qualify for the foreign earned income exclusion, either using the physical presence test ( 330+ days outside the US in the 365 days from the date you move ), or using the “bona-fide” test, which you can only qualify for by being a bona-fide tax resident of a different country for one full tax year after the year you move out of the US. If you moved out in June 2018, you’d qualify for this on Jan 1st, 2020. The other alternate is to file a dual status return, in which case the main tradeoff is that you won’t get the standard deduction.

You can use IRS Form 2350 for an extension of time to file a tax return if you intend to use either the physical presence tests/the bona fide residence test. You may also want to look into the details of form 2555, since that’s the form where you actually claim the foreign income exclusion.

#4

Thanks, Karthik.