Question

Moved from US to Canada mid year

Forum|Forum|1 year ago
December 17, 2024
1 reply
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I and my wife were working in the USA from Jan-01 to July-01 on H1B and H4 respectively.

We both moved to Ontario, Canada on July 1st and began working from July 8th for our Canadian employer. My wife could only work for 3 months here in Canada.

We have two kids, ages 9 and 6 as our dependents. We do not and did not own a house in Canada or back in the USA.

I have some interest related income back in the USA (1099-INT) .

We did a significant charity in Canada as well back in the USA and would like to maximize our credit for it as well. We also paid $5000 USD in cash when moving to Ontario.

Can anyone provide some guidance on how to properly file taxes in both countries and maximize our tax refund based on conditions and charity we did in Canada (~$27,000 CAD)

Not A Product Question

P

pk12_2

Employee

@FileYourSelf for US tax purposes , please can you answer the following:

(a) when did you enter the US with H-1 and your spouse with H-4 ? What we are trying to understand is if you are a US person ( Resident for tax purposes ) for the current tax year ?

(b) which country are you citizen(s) of --- both of the same country or different ? How about the children ?

(c) your US charitable contributions are for 501 c(3) ( i.e. US registered )charities or what ?

Based on your post, your US federal filing would have to use itemized deduction ( generally not very good unless you have lots of state taxes , medical and/or charitable contributions.

I will circle back once I hear from you --yes ?

F

FileYourSelfAuthor

Thank you PK for your interest in helping me. Below are my answers to your question

(a) We have been living in US on H1B and H4 visa since 2017 until July-01'2024

(b) Me and my wife both are Indian Citizens while both of our kids are U.S. Citizens

(c) We did $27000 CAD of charity for a non-profit organization registered in Canada and around ~$4000 USD worth of charity for US based non-profit organization.

Should I file as US resident, US non-resident or as Dual filing?

P

pk12_2

Employee

@FileYourSelf since you ( H-1 ) have lived in the USA for quite some time:

(a) your tax filing status would be resident ( Substantial Presence Test -- 183 days -- for 2024 counting all the days present in 2024, plus 1/3rd the days present in 2023 and 1/6th the days present in 2022)

(b) Your wife's status would be same as your because her visa is a dependent visa.

(c) Since you left the USA ( and have or should have informed the Immigration that your visa has expired an d you are leaving the country ) , for IRS you will have dual status .

(c) Dual status means that

(1) you are taxed on world income for the resident period ( 01/01/2024 through 07/01/2024 ) -- filed on form 1040. and

(2) you are taxed ONLY on US sourced income from 07/02/2024 through 12/31/2024 and reported on form 1040-NR ( Not supported by TurboTax , so use tax professional, SprinTax or downloaded from www.irs.gov and filled out by hand -- these are .pdf fillable ).

(d) This also means that you cannot e-file. Print the TurboTax prepared 1040, sign date, Write " DUAL STATUS FILER " on page 1 of 1040; attach the form 1040-NR ( even if the actual income from US sources is nil ). Mail the whole package in.

(e) Note that because your "resident period" is a short year, you have to use itemized deduction and thus your charitable contributions would come in handy ( if my memory serves me right, only US 501 (c) 3 in your case )

(f) Note that it is best to keep your US bank account open till the end of Calendar year 2025 to be able to deposit any refunds and/or pay to the IRS.

(g) Generally you have to make sure that all your tax dues are paid or withheld before you leave the country for good.

(h) For your state return, you only use world income while a resident of the state i.e. you file a part-year return ( but check your state's rules for residency ).

Hope this answers your query. Is there more I can do for you ?

Namaste ji

pk