My status in Canada living in the USA for taxes

[mikeandkristina 6]

I've been looking really hard for the answer on here and on the CRA website, but it's still so confusing and I cant seem to find the answer to my situation.

 

I'm almost certain that I'm a "deemed non-resident of Canada" or a "deemed resident of Canada", but I could be wrong. I moved to the USA on a K-1 Visa in November of 2016 and married in December of 2016. Obviously I lived in the Canada for more than 183 days and that's where I made my judgement. I don't have a home in Canada, only a bank account. Other than that, everything else is here in the USA. The CRA knows that I'm living here. Which of those two terms that I listed am I under?

 

Any info would be much appreciated!!!!!

Edited March 7, 2017 by mikeandkristina

[journadian 13]

Looks like you would be a deem resident http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/dmd-eng.html

 

i think you would do your final tax obligations with Canada.  I'm not too sure for your situation but you would do departure tax since you will be a non resident.

[NikLR 13,232]

~~moved to Canada regional forum.  Topic is not US taxes~~

 

When you moved and activated your visa you became a non-resident of Canada however you were a resident at the time so you paperfile (such a pita).  Since you didnt make any money as a non resident that year  (ie: ei) you file as a resident. 

[Lemonslice 4,963]

You can fill form NR73 and CRA will determine your status. 

 

Just to be clear, you can be as non resident of Canada and still need to pay Canadian taxes, it's my case (I however do not need to pay US Taxes on that income, just to declare it to the IRS). The tax treaty is a good read... or you can check with tax expert for the first years.

[Udella&Wiz 325]

A word of warning about the NR73 - I personally filled it out wrong by answering1 question incorrectly and CRA initially deemed me a resident for the 2nd tax year away as well (I left in Nov similarly and had no US income at the end of that year). I had a terrible time refiling a new NR73 to correct it and it was quite annoying. Best advice given to me was just file your exit return, skip the NR73...not a requirement if I recall correctly and most folks don't use it and move on.

 

 

[NikLR 13,232]

Also did not do an nr73. 

[13roots 35]

I would not advice anyone to use NR73. In OP's case, it will come back as non-resident because the strongest tie they consider is marriage and your spouse is in the US. So even though you were married for only for 1 month of the year, logically you would think this makes you a resident of Canada, but it's not so straight forward. I would say you could make a case to qualify as a resident of Canada AND of the US, so maybe first determine how you are being treated in the US for tax purposes, then that will tell you the answer for Canada (it will be the opposite). 
 

If your spouse is a USC, you can choose to be treated as a resident for tax purposes for the 2016 tax year, and that will allow you to file married filing jointly to maximize deductions in the US, especially if your spouse worked and paid taxes in the US. Otherwise, it goes by the number of days you lived in the US vs Canada and you will have to file your taxes separately from your spouse in the US - him as resident, you as non-resident.

 

I would suggest you pick the one that makes the most sense for your circumstances and file e.g. did you earn income in Canada, in the US, did your spouse earn income in Canada, in the US, etc. For most people, being treated as a non-resident of Canada is preferable because it ensures a lower tax burden overall since the income tax rate in Canada is generally higher.

 

There are multiple variables to consider and each will tilt the answer in one direction or the other. You could opt for simplicity over maximizing your refund for example .

 

I hope I haven't confused the discussion. Good luck!

 

Edited April 4, 2017 by 13roots

[Lemonslice 4,963]

Thing is, NR73 or not, the taxpayer is not the one deciding their residency status, CRA is.  So, if from your return, they think that you are still a resident (from your income sources, property or whatnot), they will ask for a residency determination.  

[13roots 35]

26 minutes ago, Lemonslice said:

Thing is, NR73 or not, the taxpayer is not the one deciding their residency status, CRA is.  So, if from your return, they think that you are still a resident (from your income sources, property or whatnot), they will ask for a residency determination.  

Well, yes and no, because regardless of what CRA says, if you are a resident in the US you cannot also be a resident in Canada, even if that is CRA's determination based on the NR73 form, and you can choose your residency status in the US in the first year if you are married to a USC. However, income source would be a secondary consideration to marriage and location of primary residence in OP's case. 

 

Here is the relevant section from CRA - http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html

 

Your residency status if you left Canada

• If you are working temporarily outside Canada, vacationing outside Canada, commuting (going back and forth daily or weekly) from Canada to your place of work in the United States, or attending school in another country, and you maintain residential ties with Canada, you may be considered a factual resident of Canada.
• If you left Canada and established a permanent home in another country and you severed your residential ties with Canada ceasing to be a resident of Canada in the tax year, you may be considered an emigrant.
• If you established ties in a country that Canada has a tax treaty with and you are considered a resident of that country, but you are otherwise a factual resident of Canada, meaning you maintain significant residential ties with Canada, you may be considered a deemed non-resident of Canada. The same rules apply to deemed non-residents as non-residents of Canada.
• If you left Canada and you are a government employee outside Canada, which includes members of the Canadian Forces posted abroad, you are usually considered a factual resident or a deemed resident of Canada. For more information, see Government employees outside Canada.

 

So I would again suggest to OP to sort out US status first, then that will help determine Canadian status. US status determination is much simpler.

Edited April 4, 2017 by 13roots

[13roots 35]

Here is the IRS page regarding residency status - 

https://www.irs.gov/individuals/international-taxpayers/u-s-citizens-and-resident-aliens-abroad-nonresident-alien-spouse

[Lemonslice 4,963]

I'm not here to argue, but from experience, tax law can get really complicated, really fast.  Penalties can also be important, that is why I suggest to be prudent.