Departing return

[lostcanadian]

I am a canadian citizen that became a US tax resident as of Jan 2, 2021 and I am trying to file my 2021 tax returns. My wife is a US citizen and never lived in Canada and made about $80k in the US during 2021 and doesn't have a Canadian SIN. How do I fill out the spouse section via ufile? Do I put her net income as $0 and SIN as 00000000.

 

also for myself i worked in the usa all year and never went back to Canada, do I need to report my w2? Or is my income $0 too.Thank you

[Maggie3]

Hello lost Canadian,

The first thing to consider is your residential status with  Canada. Did you leave Canada and sever all ties to Canada ?

We recommend that form ”NR-73 Determination of residential status (leaving Canada)”  be filled in and sent to the CRA to determine your residential status.

Once your status is clarified your questions may be answered accurately.

Click here for the NR-73 Form:

https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/nr73.html

 

[lostcanadian]

Based on the NR73 I am a non-resident for tax year 2021.

1) I am using ufile online to do my departing return and my wife is a US citizen and never lived in Canada and made about $80k in the US during 2021 and doesn't have a Canadian SIN. How do I fill out the spouse section via ufile? Do I put her net income as $0 and SIN as 00000000.

2) For myself i worked in the usa all year and never went back to Canada, do I need to report my w2? Or is my income $0 too.

3) Lastly, for bank interest income from a Canadian TD bank. Do I report this both to the IRS US taxes and CRA Canada taxes? Do I get a credit for that amount paid? 

THank you

[Maggie3]

Hello  lostcanadian,

1.If your spouse is a non-resident and does not have a social insurance number, you must enter a SIN as per the following format: 000-000-000.  Naturally, your spouse must report their income, but cannot file any tax return in Canada. His or her income will simply help determine the credits for which you may be eligible.

2.You must report your world income. Report all foreign income on line 104 of your T1 return. If your W-2 form includes deductions for U.S. taxes, benefits, or retirement plans, make sure to include this information on line 207 of your tax return. These contributions may be tax deductible under the Federal Foreign Tax Credit.

3.Your bank interest must be reported on your Canadian return.  If you are a U.S. resident, the Internal Revenue Service (IRS) requires you to report all worldwide income. This includes income from interest from Canada. 

Based on the tax treaty between Canada and the US, you may be eligible for a foreign tax credit.
For more information on the Canada US tax treaty please refer to the link below:

https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties/country/united-states-america-convention-consolidated-1980-1983-1984-1995-1997.html

[lostcanadian]

Thank you - on ufile where it asks for my spouses net income, would I put $0? Given that she only receives income from her USA employer and not from any Canadian sources?

3 - For the bank interest credit, is there anything I need to do on the ufile software to report that? thanks

[Maggie3]

Hello lostcanadian,

Hello lostcanadian,

You must report your wife's income. It will only be used to determine if you are eligible for any tax credits. 

Assuming you received an NR-4  Non-Resident Tax Withholding, Remitting, and Reporting slip, you must report this  on the line where it would normally be included, and the amount appearing in box 17 or 27 of the NR4 slip must be included on line 43700.

To report this amount on Federal line 43700, please follow the steps below:

1-OIn the "Left side menu of the Interview tab", select "Interview setup".

2- On the screen to your right, go to the "Pension" group, check the box for "Pension income. Other income and split pension income, COVID-19 benefits (T4A, T4A(OAS), T4A(P), T4A-RCA, T4RSP, T4RIF, T1032)" and click "Next" at the bottom of the page.

3- Return to the "Left side menu in the Interview tab" and select " T4A and pension income ". On the page to your right, choose "T4A - Pension, retirement, annuity, and other income (COVID -19 benefits”.

4- On the page that appears entitled "T4A - Pension, retirement, annuity and other income", go to line “Federal income tax deducted Box 022” and enter the amount in Canadian dollars.

[lostcanadian]

Thank you, for the Canadian bank interest - it seems it's being reported the same as usual T4/T5 so wouldn't I be getting double taxed by both Canada and USA since for my IRS tax return I reported it as well just as I would for a 1099?

[Maggie3]

  Hello lost canadian,

Article XI.1 of the Canada -US  tax treaty states : «1. Interest arising in a Contracting State and beneficially owned by a resident of the other Contracting State may be taxed only in that other State».

Due to the tax treaty, taxpayers are not double taxed. 

[lostcanadian]

Thanks - can I do my departure return on ufile website online? Regarding the interest, how do I enter that on Ufile so that I don't get double taxed since I already reported that on IRS. thanks 

On 8/26/2022 at 9:10 AM, Maggie3 said:

  Hello lost canadian,

Article XI.1 of the Canada -US  tax treaty states : «1. Interest arising in a Contracting State and beneficially owned by a resident of the other Contracting State may be taxed only in that other State».

Due to the tax treaty, taxpayers are not double taxed. 

 

[Maggie3]

Hello lostcanadian,

For more information on this topic, please contact our office by calling 1-888-633-8414 or send an email from this link: https://www.ufile.ca/contact

Our agents will be pleased to assist you with your inquiry.