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QUESTION:
I moved to NJ from Toronto last May 26, 2003 on a H1B visa (3 years). I am 100% sure that my employer will sponsor me for a green card. My husband took a 3-month leave of absence to help me settle in the US - he has H4 visa. Our children are adults - we have no dependents. Our house is owned by me, my husband and my daughter (our adult son lives there too). We will be selling our house this year and my husband will be moving as well on or before June 1. Am I a non-resident taxpayer of Canada for 2003? If yes, are there any loopholes to avoid being double taxed on my US income which is quite substantial considering the moving expenses added into it (paid for by the company)? I have Canadian income from Jan. to May 2003.
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david ingram replies:
If I were to prepare your tax return, I would treat you as a tax resident of the US and possibly a factual resident of Canada. A factual resident of Canada (because your husband is still here and you still have the house up for sale) reports the US income on his or her tax return and then deduct / exempt the US income on line 256 under Article IV of the US Canada Income Tax Convention.
I have done this dozens of times including audits and amending returns where people in your position had already paid Canada tax incorrectly. The following Wolf Bergelt Tax case (you can find it and other cases at www.centa.com [US/Canada Taxation]) is an example of this. ( http://www.centa.com/articles/U.S.Cdntaxation.htm )
In 1986, Wolf Bergelt won non-resident status before Judge Collier of the Federal Court, even though he was only out of the country for four months and his family stayed behind to sell his house. He had given up his memberships, kept only one bank account and rented an apartment in California until his house in Canada was sold. Four months after his move, his company advised him that he was being transferred back to Canada. Judge Collier said his move was a permanent (although short) move and he was a non-resident for tax purposes for those four months.
Let me know if I can help. We can handle your return by snail mail, email, fax or courier.
At this late date, we would be filing a US extension because the US deadline is April 15th and there are too many people ahead of you.
Contact numbers and addresses are below AND
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David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
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Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
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