Form 4868 --- Just file it. TN in the US -

QUESTION: My husband came to the US on a TN visa in March 2007.  I followed soon after in August 2007 with my own TN visa as well.  Now it comes time to file our tax returns.  Do we need to include our Canadian incomes in our tax returns?  When i look at the guide, my husband's tax should be filed as a resident (substantial presence test); while mine is non-resident.  Do we need to file a tax return in canada as well?  we have not left canada -- bank accounts maintained, address maintained, etc.  In fact, we are now in the process of returning to Canada.  Sorry for the confusing email but the questions are:
1.  Should we file tax returns in both Canada and US? which ones do we do first?
2.  Should we report Canadian income in US tax return?
3.  Should we report US income in Canadian tax return if we're also doing Canadian tax return?
4.  is our situation something that can be covered in a regular tax software if we choose to file on our own?

Your help would be must appreciated.

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david ingram replies:

This is the only question answered today.  Just too busy filing extensions,  (form 4868) which is what everyone should file right now if they are having trouble getting there US 1040 or 1040NR put together on time. 

You do NOT have to send money with the extension .  However, you will pay a late paying fee if you owe money.  However, even if you owe $10,000, the late filing fee for a month is still less than $200.00 and you will get much better service from your tax consultant on May 5th than you will on April 14th.

http://www.irs.gov/pub/irs-pdf/f4868.pdf

With regard to your TN problem.  The following older answer may help

QUESTION:

I started working in the states last April for about 8 months with a TN visa. I was wondering if I have to pay taxes on income earned in the states to Canada as well?


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david ingram replies:

You should file a departing Canada Income tax return with form T1161 and maybe a 1243 and 1244 if you have left any assets behind.

These older questions will help a bit


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david ingram replies:

As described, you have no tax to pay to Canada and should not have bought an RRSP for 2007.

Basically, you should be filing a departing Canada return and look at T1161 to see if it is necessary to file it -  Usually, you would file it is you own a summer cottage, home, non-RRSP mutual fund or brokerage account or are leaving a share of a family business or farm behind.

For the US, you would file a US1040.  there is no tax return in Texas, Nevada, Alaska, Florida for you to file.

If your intention is to come back to Canada, you should likely NOT buy a ROTH.  If you want a tax deduction buy a conventional IRA or participate larger in a company 401(K)

We charge $900 to $3000 for US Canada tax returns

There is a more detailed list further down below.



I am Canadian citizen and have been working in USA on TN-Visa since 2004. I have a valid Canadian driver license, no medical card, working bank account and has no property. All my family is staying with me in USA.

1) Am I suppose to file a Canadian taxes every year.

2) If I do, what would be the roughly tax break up like 20% paying in Canada and 80% in USA.

3) What would be your fee to file Canadian and USA taxes.

Thanks & regards.

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david ingram replies:

You should have filed a departing Canada return in 2004.  there is no need to file a 2005, 2006, or 2007 return as you have described your situation.

If, on the other hand, the Canadian government asks you for a return for any of those years, you, as a Canadian citizen, are required to file.  Report all of your US income on the T1 and then deduct it all on line 256 of the return under Article IV of the US - Canada Income Tax Convention (treaty).

This older question and answer may help

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I moved to Nevada for a job July 2006, and still work there now.  Do I do my
taxes in canada and us seperately? My earnings for 2006 in Canada were very
low.
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david ingram replies:

You have more than one choice.

1.   a) You file a departing Canada tax return including form T1161 and 1243 and 1244 if you left more than $25,000 worth of assets behind.
   
        b)
You file a 1040NR Dual Status Statement for the US and then a 1040 Dual Status Return to report the US income only.  The statement is there to separate out any US income you may have received BEFORE you actually went to the US. You can NOT claim the standard deduction on a Dual Status Return You can only use itemized deductions on a Dual Status Return. 

2.   a)   You file Canada as in 1a) above.

       b)   You file a 1040 tax return reporting your world income for the year including the Canadian income.  Then you file US form 1116 to claim a foreign tax credit for the tax, CPP and EI you paid to Canada.  This allows you to claim the standard deduction on the US return.

Good luck.  Remember that you can always send the returns here by fax, courier snail mail or pdf email.
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david ingram replies

If you are applying for an H1B visa and intend to get a green card and your family is not moving unitl the resident alien cards come through, you should be filing as a US resident and not paying tax in Canada.  If you have a house, it should be put in your wife's name only.  You would file a US joint return with your wife and claim your children as dependents.

If you are not intending to stay in the US and are still spending a lot of time in Canada, you would file as a Canadian resident and claim a foreign tax credit for the taxes, FICA and Medicare taxes you pay to the US after filing your US 1040.

There is an in between position where you might be a factual resident of Canada where you report your US income to Canada but deduct it then on line 256 under Article IV of the US Canada Income Tax Convention. In this case you would be a tax resident of the US and file a joint US return with your wife.

You need to sit down in person or by phone with someone who really understands it.
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