2010 Tax thread - For Canada and the U.S.

[minnew 4]

What you choose as your leaving Canada date is open to interpretation and there has been no guidance on what they want. Being conservative, I usually take the approach with the least risk, which is the date you left Canada to take up residence in the US. One could argue that you are not technically a resident until you receive the Green Card which is much later. But if CRA finds against you, you will owe for the interim.

What do you mean by lump sum pension. Do you mean cashing in an RRSP?

As to whether you can use the 2225, it is quite clear, if you lived outside the US for 330 out of any consecutive 365 day period, not necessarily a calendar year, you can use it to exclude income for the period you were a non-resident.

Thank you zyggy.

The lump sum pension was from an employer plan (matching) in Canada. Is it considered a RRIF? It was around 6K so they automatically deducted 20% income tax.. $$ that I don't believe I can get back from CRA?

I began receiving EI the very last week of 09, I imagine I will get an 09 T4E for that payment.. Do I claim the EI using form 1116?

2555 can only be used for earned income? Not EI or pension correct?

Edited February 4, 2010 by minnew

[minnew 4]

Sorry to double post couldn't edit... Don't know if it makes a difference or not... It was a public employees pension plan.

[zyggy 9]

Ok, my tax issues aren't regarding Canadian income (got that all out of the way a couple of years ago, thank goodness), but I saw that Réjean's name was misspelled on his 1099-G from Missouri Unemployment and one of his W-2s. Does anyone happen to know if we have to wait to file until we get those amended with the correct spelling of his first name?

Amending the W-2 for a misspelling is not necessary, you can file as is

[zyggy 9]

Thank you zyggy.

The lump sum pension was from an employer plan (matching) in Canada. Is it considered a RRIF? It was around 6K so they automatically deducted 20% income tax.. $$ that I don't believe I can get back from CRA?

I began receiving EI the very last week of 09, I imagine I will get an 09 T4E for that payment.. Do I claim the EI using form 1116?

2555 can only be used for earned income? Not EI or pension correct?

So you cashed in the amount and the CRA took the 25% non-resudent tax? Or are you going to get $6,000 per year for life?

[zyggy 9]

Just to add

1) You can try to get some of the non-resident tax back by filing a Section 217 return.

2) Did you cah in the amount while you were still in Canada?

3) The cashing in was a one-time deal?

4) Yes, for EI income earned while in the US, you use the Form 1116 to get a foreign tax credit on the amount taken by Canada. Remember that the first $2,400 is tax free in 2009, even if it is Canadian EI.

5) EI and Pension Income are not earned income and therefore cannot be excluded using Form 2555. However, you can get a foreign tax credit on this income using Form 1116.

[minnew 4]

So you cashed in the amount and the CRA took the 25% non-resudent tax? Or are you going to get $6,000 per year for life?

It was a one time payment, I will not be receiving another payment. The payment letter was dated Sept 15, 2009, my parents received it in the mail the day AFTER I left Canada (Sept 21) which was Sept 22, 2009 and was deposited into my bank account that day. I'm hoping I did not screw myself there...

Anyways, the non resident tax was not taken. The public employees pension plan withheld 20% of the almost 6K because of regulations based on the dollar amount in your account when you take the lump sum. 5K & under the plan would have only withheld 10%.

The pension plan also sent me a small payment that apparently did not "post" in time when they did the payment for the lump sum. It was about $170 with 10% tax withheld, unfortunately it was sent October 1, 2009 when I was in the USA. Now I am realizing that the plan should have withheld 25%...How do I fix this with CRA?

Just to add

1) You can try to get some of the non-resident tax back by filing a Section 217 return.

2) Did you cash in the amount while you were still in Canada?

3) The cashing in was a one-time deal?

4) Yes, for EI income earned while in the US, you use the Form 1116 to get a foreign tax credit on the amount taken by Canada. Remember that the first $2,400 is tax free in 2009, even if it is Canadian EI.

5) EI and Pension Income are not earned income and therefore cannot be excluded using Form 2555. However, you can get a foreign tax credit on this income using Form 1116.

Sorry to be redundant....Do you mean the first $2400 of income for the 1116 is tax free? EI+pension income?

Taxes!

[TimandJoyce 1]

That's what we did for 2008, used ufile. Filed as non-residents and mailed our return in. It took them a couple of months to process it.

So you used ufile to do all the calculations and what not, printed it off, and mailed it? That would make sense, and be easier on my brain! I'm the kind of person that needs a play by play on everything, so sorry if these have been repeated.

I also read about claiming the foreign interest on accounts over 10, 000. What if my account doesn't have that much interest? Seriously, it's a regular chequing, not a savings.

Tim hasn't actually filed anything because of his disability, but now I'm wondering, because he's married and everything, and this year I'll be collecting EI, as well as I receive my survivor's benefit every year, should he be filing something to claim that? I guess I'll get him to phone someone in the know...lol.

Oi! I'm thinking this stuff is going to get confusing very soon! I still need some more info from home before I can start to file. Course, when I got my T4, and it's not a complete year of working....the tax that was withheld....I might be able to buy a pair of shoes...

*Me thinks I'll be back here before long with another question or two*....

[EED 0]

Does anyone know what is the official exchange rate to use for 2009?

[ashenflowers 5]

hmm... so after reading this thread, I'm just wanting to clarify for me what is or isn't relevant at this point. I'm more confused, and probably don't have to be. My situation is similar to Danu. I actually lived in Canada for all of 2009 (I arrived in the U.S. Jan 3rd, 2010). So, for my 2009 taxes I just file them normally, yes? I could do it online, print, then mail it, I suppose. Would I be able to get my refund in USD sent to my U.S. address, or will they send it in Canadian funds and I'd have to deposit it? I still have my Canadian bank account. Could I just get it direct deposited into there still, and cash it out later? Do I have to file anything for the U.S. at all? I don't see why I would, but who knows. My T4 is going to have my parents' Canadian address on it (according to my employer). Is that going to mess things up if the addresses don't match?

We were married Jan 20th, does my husband file married or single? I would've thought single, since his taxes are for 2009, and he was single for all of 2009, but now I'm not so sure.

[Malrothien 6]

hmm... so after reading this thread, I'm just wanting to clarify for me what is or isn't relevant at this point. I'm more confused, and probably don't have to be. My situation is similar to Danu. I actually lived in Canada for all of 2009 (I arrived in the U.S. Jan 3rd, 2010). So, for my 2009 taxes I just file them normally, yes? Yes, you would file like normal. I could do it online, print, then mail it, I suppose. Would I be able to get my refund in USD sent to my U.S. address, or will they send it in Canadian funds and I'd have to deposit it? It would be in CDN funds and if you have done direct deposit in previous years, that will be done. I still have my Canadian bank account. Could I just get it direct deposited into there still, and cash it out later? Do I have to file anything for the U.S. at all? Not until 2011. I don't see why I would, but who knows. My T4 is going to have my parents' Canadian address on it (according to my employer). Is that going to mess things up if the addresses don't match? I would use your address in Canada for your return. Just put in the section where it asks if you have left Canada with the date you left.

We were married Jan 20th, does my husband file married or single? Single, he would have had to have been married by Dec. 31, 2009 in order to qualify as married. I would've thought single, since his taxes are for 2009, and he was single for all of 2009, but now I'm not so sure.

[SapphireDreams 71]

Has anyone ever had this sitatuation? I'm a bit confused and would love for someone in a similar situation to explain what they did.

I lived in Canada from January - June 6th, 2009. I worked full time during that time. I will have a T4. I will also have student loan interest from all of 2009 in Canada to claim on my taxes.

I lived in the US from June 6 - onwards and was married June 9th. I worked full time from August 29-December 31. I received my greencard in November. I've figured out that my tax home is the US and that I file married.

So here is what I think I need to do, but I'm not sure so if anyone can clarify, please let me know!

File a Canadian return with my leave date as June 6th. I will need to pro-rate the basical personal amount up to that date. If I use ufile, I'm guessing it will do that for me automatically?? Anyone know?

Anyone know if I can claim the student loan interest for the whole year? Or, will that be pro-rated also?

Files my US return married with my husband. Use a form to claim my foreign earned income. Is it form 2555? Or should I use a different one?

Also, can I use the Canadian student loan interest for US taxes?

Thanks!

[minnew 4]

Hi Sapphire!

I'm hoping that someone will have an answer about the student loan interest as well. I have unused carryover amounts from student loans too.

I don't have answers to your other questions, but I do have an answer about your question for Ufile.ca U file will automatically prorate your deductions and credits based on the information you enter in the (immigrants &emigrants section of Ufile) I was playing around with Ufile and my personal exemption did go down based on the numbers I inputed in this section:

Emigration from Canada

"If the Canadian-source income you are reporting for the part of the year you were not a resident of Canada is at least 90% of your net world income for that part of the year (or if you had no income from sources inside and outside Canada for that part of the year), you are eligible to claim the full value of deductions and credits on your tax return. Otherwise your deductions and credits must be prorated by the time you resided in Canada. The program will decide if you are eligible for the 90% rule based on the information you enter here. If you leave the following sections blank, the program will assume that you are not eligible for the 90% rule and will prorate your deductions and credits.

Note

If you are claiming full federal non-refundable tax credits, attach a note to your tax return stating your net world income (in Canadian dollars) for the part of the year that you were not a resident of Canada. Show separately the net income you received from sources inside and outside Canada for that part of the year. The CRA cannot allow full federal non-refundable tax credits without this note"

Canadian source income during Canadian non-resident period

Income from employment in Canada

Income from a business carried on in Canada

Taxable capital gains from Canadian property

Taxable part of scholarships from Canada

Taxable part of fellowships from Canada

Taxable part of bursaries from Canada

Taxable part of research grants from Canada

Foreign source income earned during Canadian NR period

Name of country

Net employment income

Net pension income

Social Security

Net interest and other investment income

Taxable capital gains

Net rental income

Net self-employment income

Other income

Country of residence on December 31 2009 < select >

Edited February 8, 2010 by minnew

[zyggy 9]

Does anyone know what is the official exchange rate to use for 2009?

You use the one provided by the Federal Reserve. It is on their website.

So you used ufile to do all the calculations and what not, printed it off, and mailed it? That would make sense, and be easier on my brain! I'm the kind of person that needs a play by play on everything, so sorry if these have been repeated.

I also read about claiming the foreign interest on accounts over 10, 000. What if my account doesn't have that much interest? Seriously, it's a regular chequing, not a savings.

Tim hasn't actually filed anything because of his disability, but now I'm wondering, because he's married and everything, and this year I'll be collecting EI, as well as I receive my survivor's benefit every year, should he be filing something to claim that? I guess I'll get him to phone someone in the know...lol.

Oi! I'm thinking this stuff is going to get confusing very soon! I still need some more info from home before I can start to file. Course, when I got my T4, and it's not a complete year of working....the tax that was withheld....I might be able to buy a pair of shoes...

*Me thinks I'll be back here before long with another question or two*....

Ufile is not set up to deal with people in our situation. Don't use it, you will do it wrong. You're going to have to do it by hand using the CRA Emigrant guide.

It was a one time payment, I will not be receiving another payment. The payment letter was dated Sept 15, 2009, my parents received it in the mail the day AFTER I left Canada (Sept 21) which was Sept 22, 2009 and was deposited into my bank account that day. I'm hoping I did not screw myself there...

Anyways, the non resident tax was not taken. The public employees pension plan withheld 20% of the almost 6K because of regulations based on the dollar amount in your account when you take the lump sum. 5K & under the plan would have only withheld 10%.

The pension plan also sent me a small payment that apparently did not "post" in time when they did the payment for the lump sum. It was about $170 with 10% tax withheld, unfortunately it was sent October 1, 2009 when I was in the USA. Now I am realizing that the plan should have withheld 25%...How do I fix this with CRA?

Sorry to be redundant....Do you mean the first $2400 of income for the 1116 is tax free? EI+pension income?

Taxes!

No. Just the EI..

[zyggy 9]

Has anyone ever had this sitatuation? I'm a bit confused and would love for someone in a similar situation to explain what they did.

I lived in Canada from January - June 6th, 2009. I worked full time during that time. I will have a T4. I will also have student loan interest from all of 2009 in Canada to claim on my taxes.

I lived in the US from June 6 - onwards and was married June 9th. I worked full time from August 29-December 31. I received my greencard in November. I've figured out that my tax home is the US and that I file married.

So here is what I think I need to do, but I'm not sure so if anyone can clarify, please let me know!

File a Canadian return with my leave date as June 6th. I will need to pro-rate the basical personal amount up to that date. If I use ufile, I'm guessing it will do that for me automatically?? Anyone know? YES. Exactly. Ufile won't do this for you, that's why you can't use ufile to do a leaving Canada return

Anyone know if I can claim the student loan interest for the whole year? Or, will that be pro-rated also? It must be prorated

Files my US return married with my husband. Use a form to claim my foreign earned income. Is it form 2555? Or should I use a different one? Form 2555 for income up to June 6, Form 1116 afterward.

Also, can I use the Canadian student loan interest for US taxes? No. It must be interest in loans from a school that is authorized to accept Federal Student loans. Canadian schools don't apply.

Thanks!

Edited February 8, 2010 by zyggy

[zyggy 9]

It was a one time payment, I will not be receiving another payment. The payment letter was dated Sept 15, 2009, my parents received it in the mail the day AFTER I left Canada (Sept 21) which was Sept 22, 2009 and was deposited into my bank account that day. I'm hoping I did not screw myself there...

Anyways, the non resident tax was not taken. The public employees pension plan withheld 20% of the almost 6K because of regulations based on the dollar amount in your account when you take the lump sum. 5K & under the plan would have only withheld 10%.

The pension plan also sent me a small payment that apparently did not "post" in time when they did the payment for the lump sum. It was about $170 with 10% tax withheld, unfortunately it was sent October 1, 2009 when I was in the USA. Now I am realizing that the plan should have withheld 25%...How do I fix this with CRA?

Sorry to be redundant....Do you mean the first $2400 of income for the 1116 is tax free? EI+pension income?

Taxes!

You didn't have to cash out, you could have kept your cash there until you were ready to use it. THere is a form to fill out to defer the tax implications of a RRSP or RRIP until it is cashed. But that's water under the bridge now.

Include all the pension money as earned income (it was earned income in the first place, just placed in a tax shelter) and report it on Form 2555. Don't worry about the extra money given to you after you entered the US, you can make a reasonable argument that it was part of the first distribution.