Canadian moved from U.S. back to Canada in 2007... how to file taxes - Dual Status US return - international non-resident cross

QUESTION:Hello --I stumbled across your site and it seems very helpful.Here is my situation.I am Canadian but went to the U.S. for university beginning in September 2001. I graduated from the school in May 2005. Beginning in June 2005 I stayed in the U.S. working. I left the U.S. at the end of July 2007 permanently to move back to Canada.I began working in Canada in August 2007 and worked through the end of the year.How should I file my taxes? Am I a resident of the U.S.? Am I a resident of Canada?Look forward to your answer!

david ingram replies:

For 2007 you will file a departing the US 1040 DUAL STATUS RETURN (line35b) and a 1040NR DUAL STATUS STATEMENT. the 1040 only reports the USincome but you do not claim or get the standard deduction. You canclaim itemized deductions if you have them.

For 2007, you will file an arriving in Canada T1 General. This onlyreports your Canadian Income but pro-rates your exemptions.

These older questions will stretch your imagination a bit.

My_question_is: Applicable to both US and Canada
Subject: Where do I pay tax?
Expert: [email protected]
Date: Wednesday March 21, 2007
Time: 10:20 AM -0500


I just moved back to Ontario, Canada after 7 years of loving inVirginia. I will continue to work the same U.S. company that I workedfor while living in VA. Basically, I will be working from home. Myquestion is, what do I need to do in order to comply with Can. Us TaxTreaty? Are there forms to fill out and send to the IRS? Also, myemployer is not sure what they need to withhold...or if they shouldwithhold anything and basically pay me cash and I will pay taxes herein Canada. What about FICA and all FUTA and unemployment?
Thank you. I appreciate all the help I can get.

david ingram replies:

This older question will help you:



I'm an American citizen residing in Canada (permanent resident) andworking for an American company remotely from home in Canada. I get aW2 at year-end. I assume I have to file both US and Canadian taxreturns.

My questions are :
1) Do I file a US tax return and claim a foreign tax credit on myCanadians tax return. Or is it vice versa?
2) Do I still file state/local tax return in the US (I lived inMaryland prior to landing in Canada), even though I now reside inCanada?
3) For the extra tax I end up paying to the 2nd country (in excess towhat I pay to the first country), can I claim any type of credit ordeductions on that tax in next tax year?

Thank you very much!

david ingram replies:

If you are working in Canada, you should not be getting a W-2. Thereason is that as a resident of Canada, you should not be paying intoUS Social Security or Medicare or paying basic income tax to the USA.

Your first tax liability for services rendered in Canada under ArticleIV of the US Canada Income Tax Treaty is to Canada.

You should be filing a Canadian T1 return and paying Canada andprovincial income tax first. Then you would file your US return andeither:

1. Use form 2555 to exempt up to $82,400 of income from US tax andthen file US form 1116 to claim a foreign tax credit on the excess OR

2. Use form 1116 to claim the foreign tax credit on your US returnfor tax paid to Canada. If you have children, you would usually do thelatter because it would usually qualify you for the $1,000 per childUSA refundable tax credit.

3. In the case of interest (10%) and dividends (15%), you must getany excess tax back from the US by reclassifying the income on form1116.

4. In the case of interest, you can claim the difference between 10and 15% as a deduction on Canadian schedule 4.

5. You should NOT be paying into a US 401(K) or US Social Security.Canada will not allow the 401(K) as a deduction.

Your employer should start paying you on a 1099 Basis and pay you yoursalary plus their share of Social Security plus their share of Medicareplus their share of any 401 or other pension plan they contribute to.

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This is not intended to be definitivebut in general I am quoting $800 to $2,400 for a dual country taxreturn.
$800 would be one T4 slip one W2 slipone or two interest slips and you lived in one country only - no selfemployment or rentals or capital gains - you did not move into or outof the country in this year.
$1,000 would be the same with onerental
$1,200 would be the same with onebusiness no rental
$1,200 would be the minimum with amove in or out of the country. These are complicated because of theback and forth foreign tax credits. - The IRS says a foreign tax credittakes 1 hour and 53 minutes.
$1,500 would be the minimum with arental or two in the country you do not live in or a rental and abusiness and foreign tax credits no move in or out
$2,400 would be all of the above andyou moved in and out of the country.
This is just a guideline for US /Canadian returns
We will still prepare Canadian only(lives in Canada, no US connection period) with two or three slips andno capital gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental andbusiness likely $450
And an American only (lives in the USwith no Canadian income or filing period) with about the same things inthe same range with a little bit more if there is a state return.
Moving in or out of the country orpart year earnings in the US will ALWAYS be $800 and up.
TDF 90-22.1 forms are $50 for thefirst and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to$100.00 each.
18 RRSPs would be $900.00 - (maybeamalgamate a couple)
Capital gains *sales) are likely$50.00 for the first and $20.00 each after that.
Just a guideline not etched instone.
This from "ask an income trusts tax and immigrationexpert" from or or David Ingramdeals on a daily basis with expatriate tax returns with multijurisdictional cross and trans border expatriate problems for theUnited States, Canada, Mexico, Great Britain, United Kingdom, Kuwait,Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand,France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador,Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel,Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland,Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, VirginIslands, US, UK, GB, and any of the 43 states with state tax returns,etc. Rockwall, Dallas, San Antonio Houston, Denmark, Finland, SwedenNorway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax Immigration Wizard Antarctica Rwanda Guru Consultant SpecialistSection 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate taxspecialist expert preparer expatriate anti money laundering moneyseasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000cross border transactions Grand Cayman Aruba Zimbabwe South AfricaNamibia help USA US Income Tax Convention

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