In Arkansas, USA for six months and Canada for six months -- Where to file?

QUESTION: I have recently been recruited to the US. I worked half of the 2002 year in Canada and half in the US. Although eligible for residency in either country, I claimed residency in the US. I filed my Canadian taxes with CCRC and paid them...I now have to file with the IRS and wonder if I have to claim my Canadian income with the IRS even though I paid Canadian tax. I don't want to get double-taxed! Please help...


david ingram replies:

I am willing to bet that your Canadian return is incorrect. To be correct, you had to show your date of departure on the Canadian T1-General on Page one. If you did a shorter form or net filed the return, it will be wrong and should be checked.

For the US, you have three choices.

1. You can file a Dual Status return which means that you have to itemize your deductions and only report your US income on that return (plus the Arkansas state return.

2. You can file a US federal Tax return and report your Canadian Income on it as well and claim Foreign tax credits on form 1116. OR

3. You can file a US federal return and report the Canadian Income and exempt it on a form 2555.


Or, you can ship it all up to us and we will look after it for you.