QUESTION:
I've started a new job in the US during 2005(my wife, child and home remain
in Canada). I received a T4 for my income in Canada (tax, CPP, etc.
witheld) and a W-2 for my new job (tax, social security, medicare withheld)
in the US (approx. 100 days in the US). I understand I must file a 1040NR.
In completing the same, can I claim an exemption for my daughter (I don't
have this identifying number that they refer to?...neither does my wife)?
-----------------------------------------
david ingram replies:
If your intention is to move to the US and you are working in that
direction, you should consider filing a joint return with you r wife in the
US and exempting your daughter as well. For Canada you would file as a
factual resident, report the US income on line 104 and deduct it on line
256.
If you are only there for 6 months or a year, then you will file a 1040NR in
the US and you can claim your wife and daughter but it will NOT save you any
overall tax. This is because you have to report the US income on line 104
and line 431 of your T1 but get to claim a credit of the tax, Medicare and
FICA and any state tax paid to the US on line 433.
Usually, this just means you owe Canada tax "right now" and have to wait
three or four months for a larger refund from the US.
Although my loyalty to Canada says this is good (Canada gets more, the US
less), the cash flow hardship is not always good for my clients.
You might want to send us the returns. you will have a hard time finding
anyone to do them properly.
--
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