Who was the tax professional?
Some reputed one located in US or Canada or typical virtual tax people from Indian virtual tax companies?
How much did he charge you for both US and Canada taxes… My friend and I am thinking to go with tax Professional atleast for the first year… Please share his/her contact details and cost you paid by Private message in case you don’t want to post publicly… Thanks
Actually it is not mandatory because there is a clause which you use to break the ties in this case… If you have solid ties with Canada then you can override Substantial presence test)… For you I think you required to file US taxes because you spent more than 183 days in US physically… Instead of this, your tax consultant could have made you part year resident because you moved out of US and moved into Canada… But yeah some things are not easy as we are also still figuring out best way to fix our taxes and friends taxes…
You are absolutely correct. Sorry late to the party. But I ended up hiring a reputed CPA firm not the typical H&R Block or other small time guys who file taxes. Yes it is super complicated with the tax status. You cannot file concurrently for two countries - that amounts to committing tax fraud unknowingly.
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Hi @prabalamrita : What do you think is correct from your opinion ?
We moved from US to Canada at the end of August.
Till August earnings in US are X
From Sept - Dec, earnings in Canada are Y
So, the tax filings should be
X in US and Y in Canada (or)
X in US and (Y + ( X * (Canada tax - US tax difference)))
No residential ties in Canada until the end of August. Got Sin and working in Canada from September. And which firm did you hire ? You can let me know in the message.
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Just sharing my experience-
I moved from US to Canada in first week on November last year. Considering the substantial presence test (183 days or more) for both US and Canada to determine my tax status for each country, I filed a resident tax return for US where I reported X and Y (converted to USD).
As part of the US-Canada treaty, I also claimed a foreign tax credit of the tax I already paid in Canada in my US return to avoid double taxation. It might not be dollar for dollar based on some additional rules though. Filed it via H&R block in US.
And since I was treated as a non-resident of Canada, I had to only report my CAD income on my Canadian tax return. I consulted H&R Canada and a lot of online forums, but filed it on my own.
But always consult a professional CPA to be clear to avoid issues later.
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Hi guys, what a great discussion. Really helped us. Can you please help with these questions as well:
We moved in Oct 2021 from US to Canada and after reading and doing my research,
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My understanding is we are considered resident of US and non resident for Canada. Hence, we should mention our status as non resident on personal tax form i.e. TD1 to our employer. To add, we are work permit holders in Canada. Please correct if I am wrong.
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We must file US taxes as resident and Canada as non resident. Does that mean we have to show Canadian income added to US income? What do we need to do to avoid double taxation.
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In this case, we should file Canada taxes first, so that we know how much taxes we are going to pay and then US, right? Although this might end up paying more taxes in the US as total salary in US will move us to higher bracket.
Kindly advise guys.
Thanks
- you are always a tax resident of the US if you are a citizen or have GC status. On your T1 you are an arriving RESIDENT as of Oct 2021 and mark this on your forms
- US Resident, Arriving resident of Canada. You will have to show GLOBAL income for 90% test
- Yes
If you file a NR73/74 form with CRA they will say you started your residency Oct 2021
Folks - can anyone share some insights for my situation?
We were in states for only 2 weeks of Jan 2021 and then moved to Canada. Should we file Us taxes first, mention worldwide income and then file Canadian taxes and mention US income? I am trying to find a good accountant for this in GTA but so far the ones I have reached out are quoting $1500 for filing the taxes for me and my spouse.
This is what I figured out after doing some research, I moved to Canada in the month of June and became PR in December 2021:
Step1: First file Canada tax return as resident or non resident based on (report only Canadian Income) :
We are not allowed to file jointly so it will be separate for your spouse and yourself, find the sum total of both taxes and say it $X
Step 2: File US tax return jointly and report combined (your spouse and yours) US Salary and Canadian salary and then apply for tax credit - $X
Experts - @traveltax @RohsOttawa @sri @srhere @panditji - Am I missing anything ? or above plans sounds good ?
I personally prefer to file by myself and 100% agree with @panditji (Jai Shree Ram Pandit ji) to have financial literacy and take ownership of my own family taxes
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Those fees are relatively normal for cross-border expertise. they range from 800 -1K USD at our firm to 3K for your situation depending on where you are going. You need to file a US return to close out your obligations and you could technically still be a resident if the last two years you were in the US 365 days
Nothing has been mentioned of the following
FBARs + Specified assets
ROTHs - don’t want them if you are a Canadian tax resident or it requires a treaty declaration
TFSAs, RESPs - taxable to the US if you are a US citizen/GC holder
Don’t let your desire to DIY make you miss disclosures that carry major penalties that come with cross border commerce
No. You cannot file as resident of both Canada and US unless you are US citizen or GC…
This is what I understand and suggest:
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If you are Canadian tax resident, and most of income for year is from US, then file US tax first as non-resident, and then file Canadian as resident and claim tax credit in Canadian Tax return.
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If you are Canadian tax resident, and most of income for year is from Canada, then you can file Canadian tax return first as resident and then US tax return as non-resident for US income.
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If you are USA tax resident, and most of income for year is from US, then file Canadian tax return as resident first and then Canadian tax return as non-resident and claim tax credit in Canadian return.
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If you are USA tax resident and most of income for year is from Canada, then file Canadian tax return as non-resident first and then USA tax return as resident later and claim tax credit in US return.
Others can suggest differently or correct me if anything wrong.
Note:
Tax resident of US or not is calculated with substantial presence test which checks 3 years no. of days with conditions.
Tax resident of Canada is if more than 183 days in current year.
So, closer ties with Canada or US can still help you break tax residency for one or another depending on situation like if you have primary house or family etc. in other country for most time of year even if you were present in other country physically.
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I agree with srhere. However, I don’t think filing one return over the other would make any difference as you will already have the details on taxes withheld reported on your W2 and T4 to calculate what you need back in the form of foreign tax credit.
If you don’t have a complicated scenario, like assets owned in either country, stocks/crypto, 401K/IRA withdrawal, GC holder etc, you can still do DIY after doing significant research. Even if you do have some of these, explore independent filing of your tax returns through CPAs in the respective countries by providing them all facts and figures. I don’t know if it normally costs $1K or above, but I think it is quite high in my personal opinion.
In my case, I filed my returns after doing a lot of self-research but I still got a CRA audit over the foreign taxes I claimed back (that could happen if the amount is more than $200). I had to share all details for my US tax return for the same year to justify the amount I was claiming back. Point being it can be stressful and confusing to do it ourselves but we have to own it at some point in time.
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Hi Guys
I bought some cryptocurrency last year through wealthsimple.
I will be filling t1135 form in this year tax return.
Questions :-
Is crypto currency considered a foreign asset ?
Which country should I mention in the form, when mentioning cryptocurrency, If it is a foreign asset ?
Thanks.
I understand that but obviously I am trying to save money if my situation is simple. I would be non resident alien (NRA) since we were in US for 15 days of 2021 even though we were full time residents for previous years. I have verified with multiple website. As an example - Easy Substantial presence test calculator
So that makes things straight forward for me IMO.
Why would I need FBAR/8938? As NRA, I am not supposed to declare my assets outside of US per IRS publication. I did sell my home but per my extensive research and going through DIY at taxact, I am exempted since I didn’t had any capital tax gains. I have 401k but didn’t made any withdrawals. Just 1099 INT and child care credits that I need to account for apart from W2 income.
I have the same question on filing US tax. Based on the website, the income in Canada also needs to be reported for filing purposes. Is it possible to append Canada’s income in the turbo tax app when filing for a US tax return?