Dual US/CAD citizen spouse living in US and taxation

[ice-qube 649]

Does anyone have any advice or experience with similar situation?

 

Background: my wife (petitioner for me) is a dual US and Canadian citizen, and relocated to US and is going to school and working there, while I am still here in Canada waiting for immigration process.

 

For the moment, she is still a factual resident of Canada and must file both Canadian and US tax returns. 

 

How do we treat her 401k contributions and health insurance premiums at her current job on Canadian taxes? Can she claim deductions or credits for these things in this situation, as far as Canada goes?

[Ayrton 965]

10 hours ago, ice-qube said:

Does anyone have any advice or experience with similar situation?

 

Background: my wife (petitioner for me) is a dual US and Canadian citizen, and relocated to US and is going to school and working there, while I am still here in Canada waiting for immigration process.

 

For the moment, she is still a factual resident of Canada and must file both Canadian and US tax returns. 

 

How do we treat her 401k contributions and health insurance premiums at her current job on Canadian taxes? Can she claim deductions or credits for these things in this situation, as far as Canada goes?

Did your wife live in the US before living in Canada? When did she move back to the US?

 

Her situation is a bit more complicated because of the dual citizenship. And it probably goes beyond what most of us here in the forum knows. My suggestion is to get professional help, because there's too much involved, us tax law, canadian tax law, us-canada tax treaty.

 

 

 

[ice-qube 649]

11 hours ago, Ayrton said:

Did your wife live in the US before living in Canada? When did she move back to the US?

 

Her situation is a bit more complicated because of the dual citizenship. And it probably goes beyond what most of us here in the forum knows. My suggestion is to get professional help, because there's too much involved, us tax law, canadian tax law, us-canada tax treaty.

 

 

 

Yes she was living in the US before she came here to live with me.

[ice-qube 649]

12 hours ago, Ayrton said:

Did your wife live in the US before living in Canada? When did she move back to the US?

 

Her situation is a bit more complicated because of the dual citizenship. And it probably goes beyond what most of us here in the forum knows. My suggestion is to get professional help, because there's too much involved, us tax law, canadian tax law, us-canada tax treaty.

 

 

 

She moved back to the US in Aug 2019

 

[Ayrton 965]

10 minutes ago, ice-qube said:

Yes she was living in the US before she came here to live with me.

According to this:

 

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

 

"If you lived in another country before living in Canada and you leave Canada to resettle in that country, you usually become a non-resident on the date you leave Canada. This applies even if your spouse or common-law partner temporarily stays in Canada to dispose of your home."

 

I don't think your wife is considered a factual resident of canada. She's considered a non-resident, and she would only need to file canadian taxes if she has any canadian income.

[ice-qube 649]

2 minutes ago, Ayrton said:

According to this:

 

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

 

"If you lived in another country before living in Canada and you leave Canada to resettle in that country, you usually become a non-resident on the date you leave Canada. This applies even if your spouse or common-law partner temporarily stays in Canada to dispose of your home."

 

I don't think your wife is considered a factual resident of canada. She's considered a non-resident, and she would only need to file canadian taxes if she has any canadian income.

Except, she has maintained her ties here. I am her spouse, living here, she still has address here, she has Canada Student Loans for her school, etc. There is no way that she is not a factual resident.

[Ayrton 965]

10 minutes ago, ice-qube said:

Except, she has maintained her ties here. I am her spouse, living here, she still has address here, she has Canada Student Loans for her school, etc. There is no way that she is not a factual resident.

 

10 minutes ago, ice-qube said:

Except, she has maintained her ties here. I am her spouse, living here, she still has address here, she has Canada Student Loans for her school, etc. There is no way that she is not a factual resident.

That's why you should contact someone that knows both US and Canada Tax Laws.

 

My understanding from the Canada Tax website is that she's not a factual resident, therefore she doesn't need to file taxes in Canada. Since she lived in the US before moving to Canada, all the ties she still has to canada are meaningless. The extract I quoted says that even if the spouse still lives in Canada, she became a non resident since the day she moved back. And student loans are not considered ties to a country for tax purposes in my opinion. I have properties under my name in Brasil and that doesn't mean I have to file taxes in Brasil.

 

But like I said, that's my understanding from the 30 minutes I spent reading the Canadian Tax website. You should definitely look for professional help in this case.

 

 

Edited May 3, 2021 by Ayrton

[Wuozopo 4,293]

On 5/2/2021 at 9:03 PM, Ayrton said:

My understanding from the Canada Tax website is that she's not a factual resident, therefore she doesn't need to file taxes in Canada.

I looked at the Canadian website too and got the same impression as you. And the tax treaty in effect (US/Canada) says pay tax to the country where you reside which is US and not to the other country.

 

edit: Actually I was also looking at the support pages for TurboTax.ca and browsing questions about dual nationality, factual resident, etc. 

Edited May 5, 2021 by Wuozopo

[ice-qube 649]

8 hours ago, Wuozopo said:

I looked at the Canadian website too and got the same impression as you. And the tax treaty in effect (US/Canada) says pay tax to the country where you reside which is US and not to the other country.

 

edit: Actually I was also looking at the support pages for TurboTax.ca and browsing questions about dual nationality, factual resident, etc. 

Definitely she is a factual resident, if you read the details. My wife has significant ties to Canada, (including me, who lives here) and the Canadian student loans she is receiving to pay for her school. To cease to become a resident, she would have to explicitly sever ties and pay the exit taxes that Canada imposes. 

[INF 96]

23 hours ago, ice-qube said:

Definitely she is a factual resident, if you read the details. My wife has significant ties to Canada, (including me, who lives here) and the Canadian student loans she is receiving to pay for her school. To cease to become a resident, she would have to explicitly sever ties and pay the exit taxes that Canada imposes. 

Yes, I agree that her ties to Canada are strong. Unlikely that she’s a resident of both countries. Most likely she can be a resident of Canada and use the tax treaty tie breakers to be a non resident of the US. However, since she’s a citizen of the US she has to file taxes in both countries so taking the positon of a non resident likely doesn’t help her!