I am just starting to gather some information to help me decide what path to follow in filling both Canadian and US taxes for 2007. Also, I am interested in looking into some tax planning for 2008. In looking into a decision if I will contract your services, I have a few initial questions.
Let’s start from the fundamentals. My situation is such, that I will be considered resident for tax purposes from both Canada and the US for 2007. Does this give 3 options or only 2? I mean, should I definitely try to apply the tax treaty and make a case for filling non-resident in one of the countries? Or should I still consider the option of filling resident on both and claim the respective credits?
A bit more about my situation:
-I moved from Canada at the beginning of the year on a company intra transfer L1 Visa (I should get green car status sometime next year). I am Canadian citizen since June of this year. I am renting in Cambridge, Massachusetts.
-I own a house and a consulting business in Calgary, AB. I have kept all credit cards and bank accounts open. I have exchanged my driver’s license for a Massachusetts license. My common-law partner still lives in Calgary.
At this point, the tiebreaker on the tax treaty is unclear to me about the center of vital interests. If I claim that is undetermined and apply part (b) and consider myself resident of the US (my habitual abode) and non-resident of Canada for tax purposes, would this be challenged by Revenue Canada?
Best Regards,
"If you are headed in the right direction, each step,
no matter how small, is getting you closer to your goal"
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david ingram replies:
You sound like a factual resident of Canada and an absolutely tax resident of the US. If you have a green card application int he works, you are taxable there on world income.
A factual resident reports their world income to Canada but deducts the US (or Australian, or French or Indonesian) income on line 256 under Artuicle IV of the respective treaty. .
These two older Questions will help. �
