for tax purposes, when does my US residency begin -- move date or green card date?

[Simmy 3]

Greetings,

- came to US on a visitor's visa in June, 2010

- married in August, 2010

- applied for green card via AOS in September, 2010

- received green card in January, 2011

- received SSN in February, 2011

So, for my 2010 taxes, do I file as a Canadian or as an American?

ie. am I considered a resident, for tax purposes, when I "moved" here on the visitor's visa in June, or only once I received my Green Card?

I have read conflicting answers to this question.

I *do* meet the IRS's "substantial presence test" of being in the US for more than 183 days since my June arrival, but would the IRS even know or care if I didn't file as an American until the 2011 tax return?

It's a two-fold question: 1. what does the IRS expect to see, and 2. what does USCIS expect to see in 2 years when it's time to lift the conditional status to permanent residency. I know they want to see tax returns, but what will USCIS consider my start of residency, whereupon the green card clearly states than my residency started in January.

Lastly, does the IRS talk to USCIS, ie. does the IRS even know that I'm here yet? There's a certain chance that we will end up moving back to Canada in year or two (and doing the whole immigration process in reverse -- sigh), in which case I won't need to show USCIS any tax returns. If we do return to Canada, it seems like I shouldn't bother with filing IRS forms at all -- provided, as I've asked, that USCIS hasn't told IRS that I'm here -- though, to be sure, I *have* applied for a SSN, so perhaps they know and care about taxing me from that? Anyhow, I'm thinking if we did return to Canada, simply never filing with the IRS, and not even letting the Canadian tax people know that I've moved to the US -- would simplify things for sure. Though again, this is just a possibility. My other questions above remain.

Thanks muchly,

Simmy

[Simmy 3]

PS. I missed one vital piece of info -- I work as a telecommuter, self-employed with single a Canadian client (ie. Canadian source income).

[CarlosAndSveta 808]

PS. I missed one vital piece of info -- I work as a telecommuter, self-employed with single a Canadian client (ie. Canadian source income).

Since you have worked while in the U.S. for more than 90 days in 2010, any income you earned from June through December is U.S. sourced income and is subject to U.S. Income Tax. See Internal Revenue Code Section 861(a)(3). The best thing for you to do is for you and your spouse to elect to treat your self as a non-resident alien and file a joint income tax return for 2010.

[CarlosAndSveta 808]

Since you have worked while in the U.S. for more than 90 days in 2010, any income you earned from June through December is U.S. sourced income and is subject to U.S. Income Tax. See Internal Revenue Code Section 861(a)(3). The best thing for you to do is for you and your spouse to elect to treat your self as a non-resident alien and file a joint income tax return for 2010.

I meant to say Resident Alien instead of non-resident alien.

[LBeachey 44]

Did you or will you pay Canadian taxes on that income? If so, you should be able to take a foreign tax credit or exclusion. And if you didn't know, your taxes are late unless you filed an extension.

[Little_My 464]

Well, to start with, you don't file "as an American" unless you become a citizen one day. Until then you file as an alien - the question is whether or not you're a resident or non-resident.

If you meet the substantial presence test, and don't fit any of the exempt categories, then you file as a resident alien. For federal, that is. State taxes have different definitions of a resident vs. non-resident, so you need to look into your particular state to figure that out.

If your income comes from Canada, and you pay your taxes from that income to Canada, according to my understanding you do not have to pay taxes to the US for that income - yet. US citizens pay "universal taxes" i.e. they are taxed from all income they make, even if it is abroad. But until you are a citizen, you don't have to pay double tax - you pay either in Canada, or in US, depending where the source of the income is.

You might still have to file taxes in the US, whether or not you made money here in 2010 - for example, F1 students have to always file taxes in the US, even if they did not work or make any money. I don't know how this goes with a person who entered with VWP and then stayed for AOS.

[Jojo92122 1,924]

As a green card holder, you are considered a US resident for the entire year. Since you immigrated to the US in 2010, your income for the entire year from both Canada and the US is subject to US taxes.

In addition to a US tax return, you will probably have to file a Canadian tax return. On your US tax return, you will receive a foreign tax credit for your earnings taxed in Canada.

http://www.irs.gov/businesses/small/international/article/0,,id=96493,00.html

[Dakine10 5,452]

Greetings,

- came to US on a visitor's visa in June, 2010

- married in August, 2010

- applied for green card via AOS in September, 2010

- received green card in January, 2011

- received SSN in February, 2011

So, for my 2010 taxes, do I file as a Canadian or as an American?

ie. am I considered a resident, for tax purposes, when I "moved" here on the visitor's visa in June, or only once I received my Green Card?

I have read conflicting answers to this question.

I *do* meet the IRS's "substantial presence test" of being in the US for more than 183 days since my June arrival, but would the IRS even know or care if I didn't file as an American until the 2011 tax return?

It's a two-fold question: 1. what does the IRS expect to see, and 2. what does USCIS expect to see in 2 years when it's time to lift the conditional status to permanent residency. I know they want to see tax returns, but what will USCIS consider my start of residency, whereupon the green card clearly states than my residency started in January.

You generally would file a full year US tax return and a part year Canadian return. You will get a credit on taxes paid to Canada on your US return. You have two options, the foreign earned income exclusion (FEIE) or foreign tax credit (FTC). FEIE is almost always more advantageous but has specific criteria that must be met. To claim the FEIE, use IRS form 2555. If you don't meet the criteria for the FEIE, you can file for the FTC using IRS form 1116. See the links below.

http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html

http://www.irs.gov/businesses/article/0,,id=183263,00.html

Lastly, does the IRS talk to USCIS, ie. does the IRS even know that I'm here yet? There's a certain chance that we will end up moving back to Canada in year or two (and doing the whole immigration process in reverse -- sigh), in which case I won't need to show USCIS any tax returns. If we do return to Canada, it seems like I shouldn't bother with filing IRS forms at all -- provided, as I've asked, that USCIS hasn't told IRS that I'm here -- though, to be sure, I *have* applied for a SSN, so perhaps they know and care about taxing me from that? Anyhow, I'm thinking if we did return to Canada, simply never filing with the IRS, and not even letting the Canadian tax people know that I've moved to the US -- would simplify things for sure. Though again, this is just a possibility. My other questions above remain.

Thanks muchly,

Simmy

The IRS and USCIS can share information. How often they do is anyones guess. Also the IRS and CRA do share tax information. If your taxes are ever witheld by W2, the IRS knows what you make - they also recieve that information. When you reside in the USA, you are a deemed non resident of Canada (whether you tell them or not). A Canadian non resident is taxed at a 25% flat rate instead of regular income tax rates. So basically, one way or another, it would be illegal and likely it would catch up with you no matter which country you end up in.

[CarlosAndSveta 808]

Well, to start with, you don't file "as an American" unless you become a citizen one day. Until then you file as an alien - the question is whether or not you're a resident or non-resident.

If you meet the substantial presence test, and don't fit any of the exempt categories, then you file as a resident alien. For federal, that is. State taxes have different definitions of a resident vs. non-resident, so you need to look into your particular state to figure that out.

If your income comes from Canada, and you pay your taxes from that income to Canada, according to my understanding you do not have to pay taxes to the US for that income - yet. US citizens pay "universal taxes" i.e. they are taxed from all income they make, even if it is abroad. But until you are a citizen, you don't have to pay double tax - you pay either in Canada, or in US, depending where the source of the income is.

You might still have to file taxes in the US, whether or not you made money here in 2010 - for example, F1 students have to always file taxes in the US, even if they did not work or make any money. I don't know how this goes with a person who entered with VWP and then stayed for AOS.

The income he earned from June to December of 2010 is U.S. sourced income and he is required to file a U.S. tax return unless the income is less than the amount required for filing a return. Since he is self-employed he probably has to pay self-employment tax unless treaty provisions between Canada and the U.S say otherwise. Once a person qualifies as a Resident Alien for U.S. Tax purposes then that person is taxed like a U.S. citizen which means he is also taxed on his worldwide income.

Non-resident aliens pay U.S. taxes and have to file a U.S. tax return only if they have U.S. sourced income. Resident Aliens and U.S. citizens are taxed on their worldwide income and must file U.S. tax returns if they meet the gross income thresholds for filing a tax return.

[I AM NOT THAT GUY 5,715]

If you file a joint return, you can elect to be treated as a U.S. Resident for the entire year for tax purposes, but you have to report worldwide income for the entire year. The advantage is you qualify for full deductions and exemptions, not just prorated ones.

[CarlosAndSveta 808]

I have stated twice that the OP's income from June to December is U.S. sourced income but I have never really stated why it is U.S. sourced income. Even though the OP has a contract with a Canadian company the determination of the sourcing of the income is based on where the work was done. Since the OP was working from the U.S. from the latter third of June to December of 2010, the income during that period is U.S. sourced income since the work was performed in the U.S.

[Simmy 3]

I would like to thank you all for your highly informative responses. Amazingly, I got much better answers here than from the Canada-US cross-border tax consultant that I paid money for.

I will be, as *everyone* here has advised (so happy for the unanimity), filing jointly with my wife as a resident alien for the whole year, and filing a part-year return for Canada, claiming the credit for that on my US return.

An extra thanks to CarlosandSveta for clarifying why my income is considered US source income, even though it is simply telecommuting work for a Canadian company. This does seem odd to me, in that way that governments are behind the technology. I mean, all I'm doing in using my laptop while in the US. That that should be considered US source income suggests the tax laws could use some updating, yes?

An extra-extra thanks to Dakine10, for answering my questions so specifically and comprehensively -- also for being the only person to tackle my question about the possibility of not doing taxes for the IRS at all, opting to pay instead Cdn taxes, in the event I was to return to Canada.

Thanks,

Simmy