Permanent Resident and Canadian Income/Residency

[Dreamtime 0]

My husband is Canadian and we married in Canada when I was visiting there. We came down to the USA and went through the whole immigration process and now he is a Permanent Resident. In 2008 he did not go to Canada at all. He does not have a house or apartment there or a DL because it expired when he was here in the USA.

He had worked for his father's company so he has been on the payroll and his father has maintained this but eventually wants to stop. I am working full time and hubby takes care of our daughter at home which is a great help to me.

Now it gets tricky: his father filed Canadian taxes and needs hubby to fly up there to get a new DL so he can show he is a resident of Canada. Hubby would have to go up there to get a brand new DL and sign forms and stuff, and I am so in the dark I don't know what is going on and they won't explain it to me. Hubby says he trusts his father and I need to stop being a control freak/worrier. I just don't think it is right to say you're a resident if you're a perm resident of the USA. I don't know how Canada sees it but I know my hubby has one bank acct and some MSRP's (retirement funds??) up there but that's all. He has some of his personal property at his parents home which we haven't retrieved yet but he doesn't live there anymore and hasn't since a few years ago.

Last year I did our taxes here in the USA with software (i know, I know, I should have gone to a pro) and we filed jointly but I didn't put the MSRP's or his foreign income on it because I didn't know what it was. Hubby and his father work with the money end up there, in fact his father set up the MSRP's and the bank acct and all and the only job hubby ever had was with the family company. He has pretty much no experience with doing taxes etc.

Another thing is at a point I was reduced in hours and made like 200 a month so I was able to get medicaid for my child and now I am thinking that since I didn't include hubby's income I will have to amend it somehow, but how? I don't really understand it all.

Can you direct me to some help or should I just throw myself on the doorstep of a professional and have them work it all out? I really want to get everything properly in order so I don't have problems, but honestly I get more confused the more I read about it. I read online that hubby should have said he was not a resident of canada and brought his MSRP's to the US and created new funds here (?). I'm SO confused with all this stuff.

Any advice or am I hopeless?

Thanks !

[Kathryn41 3,205]

you wrote:

Now it gets tricky: his father filed Canadian taxes and needs hubby to fly up there to get a new DL so he can show he is a resident of Canada.

Your husband can't do that. He cannot be a resident of Canada and a resident of the US at the same time. If he states he is a resident of Canada and applies for that with taxes he will lose his green card and permanent residence status in the US. Your husband can have retirement funds and a bank account in Canada, but he should be declaring his foreign income on US tax returns as well. He can then claim a foreign tax exemption - or exclude all of it if he didn't make a certain amount - but he cannot file a Canadian tax return as a Canadian resident. You might want to PM a member called Zyggy - he is extremely knowledgeable about Canadians and American tax requirements.

Here is an excerpt from a useful booklet you both should read online: I Am a Permanent Resident- How Do I Know What My Responsibilities Are?

http://www.uscis.gov/files/article/B4eng.pdf

File Tax Returns

If you are a permanent resident and intend to maintain permanent

resident status, you should file a Federal tax return with the

Internal Revenue Service (IRS) and any applicable State, city, and

local tax returns when required to do so. Under immigration law, a

permanent resident who is required to file a tax return as a resident

and fails to do so, or who files a nonresident alien tax form, may

be considered to have abandoned his or her status and may lose

permanent resident status. Please visit the IRS website at www.irs.

gov for more information about taxes and tax returns.

Your father-in-law as a Canadian has no idea of the tax and immigration implications of his request to his son. He is only thinking of making it easier for himself and his son tax wise in Canada, not knowing that this would compromise his son's whole legal status in the US.

Edited August 14, 2009 by Kathryn41

[raymaga 25]

I still have a bank account (I don't use it, but it is still open) and I have RRSP's as well. I am not able to contribute to my RRSP's and any interest is re-invested in the RRSP's every year.

I only have U.S. income and only do a U.S. income tax return.

[Dreamtime 0]

you wrote:

Now it gets tricky: his father filed Canadian taxes and needs hubby to fly up there to get a new DL so he can show he is a resident of Canada.

Your husband can't do that. He cannot be a resident of Canada and a resident of the US at the same time. If he states he is a resident of Canada and applies for that with taxes he will lose his green card and permanent residence status in the US. Your husband can have retirement funds and a bank account in Canada, but he should be declaring his foreign income on US tax returns as well. He can then claim a foreign tax exemption - or exclude all of it if he didn't make a certain amount - but he cannot file a Canadian tax return as a Canadian resident. You might want to PM a member called Zyggy - he is extremely knowledgeable about Canadians and American tax requirements.

Here is an excerpt from a useful booklet you both should read online: I Am a Permanent Resident- How Do I Know What My Responsibilities Are?

http://www.uscis.gov/files/article/B4eng.pdf

File Tax Returns

If you are a permanent resident and intend to maintain permanent

resident status, you should file a Federal tax return with the

Internal Revenue Service (IRS) and any applicable State, city, and

local tax returns when required to do so. Under immigration law, a

permanent resident who is required to file a tax return as a resident

and fails to do so, or who files a nonresident alien tax form, may

be considered to have abandoned his or her status and may lose

permanent resident status. Please visit the IRS website at www.irs.

gov for more information about taxes and tax returns.

Your father-in-law as a Canadian has no idea of the tax and immigration implications of his request to his son. He is only thinking of making it easier for himself and his son tax wise in Canada, not knowing that this would compromise his son's whole legal status in the US.

That's what I was thinking! Hubby was saying I worry too much but look what can happen when you just take Dad's advice and do what he wants without verifying it. We made an appointment to see a tax pro on Saturday and I'll amend my return from last year as needed. I had filed a joint return but didn't include his MSRP's or whatever they're called so I will be sure to fix that. I just want to do everything right and it's so confusing! Thank you for your reply, now I have something to show my husband to prove I'm not crazy. I also told him that he should NOT go up there and get a new DL because that doesn't make him a resident of Canada for last year anyway and it's just plain wrong in every direction. It's all pointless and his dad is a bit wonky and I don't trust him because he comes up with these stupid ideas all the time and usually leaves me in the dark. I hate not knowing what's going on especially when it's going to affect me down the line.

Edited August 14, 2009 by Dreamtime

[Dreamtime 0]

I just asked hubby and he doesn't even have his tax information here, it's in Canada with his father and he's being really argumentative about how I worry too much (he says). He says that he's like everyone else in the world and I'm somehow abnormal (!) because he says I'm "afraid of everything." Good grief. I'm just trying to be lawful and correct any mistakes I have made and not make them again, and he is just fighting with me about it all. Now I don't even have the info to give the tax professional we're seeing tomorrow. Oh well, I'll go and maybe THEY can talk some sense into him.

I also read here:

http://www.irs.gov/pub/irs-pdf/p519.pdf

about there being something called dual status aliens. It's confusing. He lived all of 2008 here but was only a PR for the last quarter of the year.

[Nich-Nick 3,354]

Everything you need to know is in that Publication 519 that you showed a link to. But if it's too hard to understand, that's why you need a tax pro. I had to read it three times to figure out how to go about my taxes last year with a part-of-the-year husband.

If your husband did not spend any time during 2008 in Canada, then it seems weird that he is on the payroll of his family company. It almost hints of Dad being a little shady on his business taxes and wants to claim his son as an employee for a tax benefit to the company. So now that son is no longer a resident of Canada, Dad wants him to be a fake resident of Canada so he won't get in trouble on his taxes. Maybe that's why they are being a little secretive and telling you to butt out. Did your huband get a regular paycheck on 2008....a real paycheck that you could spend, not a fake paycheck on Dad's books.

I'm on your side.

Edited August 14, 2009 by Nich-Nick

[Kathryn41 3,205]

The tax official should help you out. Definitely PM Zyggy - you can find his information under 'Members'. He is very knowledgeable and should be able to give you some other links as well.

Good luck.

[Udella&Wiz 325]

Sorry to point this out, but at this delicate stage of immigration, why would your husband want to do something which could potentially get his GC revoked?

I don't think he wants to mess with not reporting income or pretending to be a resident of CANADA because it's convenient for his father's tax purposes....doesn't seem like a good idea at all.

[Flames9_RN 358]

You will find MANY posts on VJ where the USA or Cdn parents stated "dont worry" or it doesnt matter, or they are cdns, so it doesnt matter, but it does!! Some very severe penalties if one does things the wrong way.

[Dreamtime 0]

You will find MANY posts on VJ where the USA or Cdn parents stated "dont worry" or it doesnt matter, or they are cdns, so it doesnt matter, but it does!! Some very severe penalties if one does things the wrong way.

"I don't think he wants to mess with not reporting income or pretending to be a resident of CANADA because it's convenient for his father's tax purposes....doesn't seem like a good idea at all."

Hubby has always let his dad take care of his financials and believe me we have had some spectacular arguments about this because he's just too used to having it taken care of for him. I don't think any of us realized the problems and his father is so stubborn and hard to talk to and set in his ways. Hubby isn't purposefully trying to do any harm, he's just too used to being taken care of and he sides with his father because that's how it's always been. And Dad didn't even consider me at all, not how this all would or COULD affect me and hubby here. So stupid.

We went to see the tax pro who was quite helpful and we're now asking Dad for allllll the information so we can amend our return and pay our fines and penalties whatever they may be. We're gonna do this the RIGHT way and if Dad has a problem with it, too bad. He has to understand that his son is married and a resident of another country now and he can't just do things like he always has.

Thanks again for all of your help.

[Flames9_RN 358]

Thats the best thing one could do--search out a competent tax consultant and get the real answers!! May be a bit $$$, but cheaper in the long run.

[zyggy 9]

Hmmm.. seems like you have gotten yourself in a mess of trouble.

You husband needs to grow up and take control of his own financial future. He has a wife and kids now and he can't have daddy hold his hand all the time. It's now his life.

Now on the taxes.... TO make things right, your husband is likely going to have to file an amended Leaving Canada return with CCRA with the leaving Canada date the day he got his GC. It's the last defensible date of his leaving Canada. Of course, his filing the return will liklely result in issues with his father. But it's your husbands return which he signed stating that it was correct and he will be the one who will take the repercussions for not doing the right thing.

On the US side, the day he bacame a permanent resident, he is required to file US taxes as a resident, usually with a joint return with you. If he is working and getting paid in Canada, then he can get a foreign tax credit on the payroll taxes that are being paid to Canada. In addition, he can exclude up to a certain amount the income he made prior to being a US Resident on the same return. Please refer to the cross border tax thread in the Canada forum for more information.

Your situation is past the complexity of what soneone from HR BLock can handle. I suggest you speak with a real cross border tax expert who is a CGA or CA, (or CPA in the US). You can find them in most border communities (Windsor, Niagara Falls, Fort Erie, Etc.).

Saying anything more would require specifics which may not be appropriate in this forum, but good luck.

Edited August 17, 2009 by zyggy

[Flames9_RN 358]

As well ensure the person knows both the USA/Canada tax systems! my inlaws used their USA accountant 1 yr to do both my Cdn/USA taxes and it was super $$$$ as they did not know the Cdn system al that well--so they had to research it, and of course charged us partially for that research,lo

[Dreamtime 0]

As well ensure the person knows both the USA/Canada tax systems! my inlaws used their USA accountant 1 yr to do both my Cdn/USA taxes and it was super $$$$ as they did not know the Cdn system al that well--so they had to research it, and of course charged us partially for that research,lo

Ugh!

We don't live in a border area so I hope I can even find someone with expertise on this. It was hard enough finding anyone who knew anything about immigration from Canada because where we are everyone does Mexican immigration. Even when we went to the border/customs people here, they thought we needed that form you get when entering the country and we didn't have one since when we came we came from CANADA and I found later that the form says right on it that you usually don't get one from Canada. The people in the Homeland Security office whom we got an infopass appointment with didn't even KNOW this. It was not confidence building at all. No wonder we're so confused.

[Dreamtime 0]

Just to update everyone, Dad's been in touch with his accountants etc. and we've worked things out to amend our returns and coordinate everything PROPERLY. Yay! Thank you again for all of your help:)