Canadian married to an American - has not moved yet - how to file?


QUESTION: Dear Mr. Ingram,

I am so grateful I came across your website while searching for answers regarding cross border tax issues. Please help me with my inquiries.

I am a Canadian and is married to a U.S. citizen since 2006.  He is in the U.S., and I still reside and work in Canada. I will not move there until the approval of my immigration papers. 

I would greatly appreciate your expert advise regarding my inquiries below.

1. I will be filing my 2006 tax return this month (Toronto,Ontario), & would want to know if I still need to declare my husband's income in my tax return the fact that he is not a Canadian resident.

2.  For his 2006 tax return would he also need to declare my Canadian income for 2006, even I have not moved there yet? Any advantages of doing so?

3. Should I get the approval of my immigration visa by May 2007, how and where to apply for the non-resident status in Canada for tax purposes.

4. For my tax return for 2007, will I need to file 2 income tax returns? A separate tax return for my Canadian income, then file a joint tax return with my husband in the U.S.? 

5. Should I move and become a resident in the U.S. in May 2007.  Will I just need to file my income from January to April 2007 for my Canadian tax return,
then from May 2007 to December 2007 for my U.S. tax return?

Or do I need to file income from Jan 2007 to Dec 2007 for my joint tax return in the U.S.? In this case would I be taxed twice? 

5. How about the Canadian 'exit return. Would that be for my 2007 tax return?

6. I immigrated in Canada in Feb 2001. Would any of my CPP contributions be carried over once I move to the U.S., considering that I have only been in Canada for less than 10 years?  Is there are U.S./Canada treaty regarding pension plan contributions?


I look forward for your help.  Thank you very much in advance.

Sincerely,

-------------------------------------
david ingram replies:

This was outside the two a day of two non-client questions I am answering but I spotted it as it was being sent away and here goes:

1.   Your husband's income should be shown on your Canadian return.  It is not taxed but does count agaisnt  you for things like GST credits and renter's and sales tax credits.

2.   He should be filing a joint US return  with you.  It will save him some $3,000 to $5,000 in tax depending upon his own income.  He will either exempt your income on fomr 2555 or claim a foreign tax credit on form 1116.

3.   There is nothing to apply for.

4.   you will have to file a departing Canada return and maybe forms  1161, 1243 AND 1244 (ONLY IF YOU ARE LEAVING A HOUSE OR STOCK MARKET PORTFOLIO OR SUMMER CABIN or other asset behind - see form T1161). You will also need to file a US return which will likley be a joint one with your husband.

5.   Yes see  4 above -

6.   Yes, there is a UK-Canada and a US-Canada Social Security Totalization agreement which will mean that if you work for at least 4 years in the US and contribute to US Social Security, that ime (not the money) contributres to the 10 year requirement for CPP.

You are welcome

david ingram

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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 and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  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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Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.
 
This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
 
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,000 would be the same with one rental
 
$1,200 would be the same with one business no rental
 
$1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,600 would be for two people with income from two countries

$2,800 would be all of the above and you 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 and no capital gains, etc. for $150.00 up.
 
With a Rental for $350
 
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.
 
TDF 90-22.1 forms are $50 for the first 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 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.
 
Just a guideline not etched in stone. 
 
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