Canadian/US Income Tax

Hi David:
I commend you on your service in educating us on Canadian/US issues.

My situation is: I am Canadian. In 2002 I went to college in California on a F1 student visa to study nursing. I got licenced as an LPN and worked for over a year at a hospital while the lawyer I hired did the paperwork for me to obtain an employment visa there. In late 2005, as a result of a clerical error on the part of the hospital HR nurse (& my lawyer), my papers were denied & I was asked to leave the country. Before I left, my lawyer filed motions to try to get the denial overturned and he was eventually successful but not until 2006. By that time the job was no longr available at my sponsoring hospital. While back in Canada I filed a 2005 US Tax return for my US income earned in 2005 and filed a Cdn tax return saying I had no Canadian income (I claimed some Canadian Income on the US Return). I worked in Canada throughout 2006 and am about to file a Canadian Tax Return. I currently still have a pending US employment visa but since the job is not available, I have not pursued the green card application. My first question is: If I can not get back to the US, do I have to redeem the IRAs I purchased in 2005 and close my bank account there? Secondly, can you point out any obvious problems that might come to your mind that may arise with the US Tax Office in my situation. Ditto with the Canadian Tax Office where I am about to file a 2006 tax return.

Thank you for your assistance.


david ingram replies:

You do not have to cash in your IRA accounts although some holders are uncomfortable holding onto small IRA accounts for non-residents and the company may want you to move your account.

You do not have to close your US bank account either although you may not have any good reason for keeping it if you do not intend to return.

If you are questioned by the financial institutions, telling them that you intend to return as soon as possible will likely mean they will keep the accounts open in the interim.

No problems that I can see although if you had some earnings in Canada after your return in 2005, you should have filed 2005 in Canada.

David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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