Canada-US Cross Border Tax Help

[Phil Hogan, CPA, CA]

Hi everyone

I wanted to reach out to everyone on the forum to extend an introduction and offer any advice I can on Canada-US tax matters. I specialize in preparing both US and Canadian tax returns (mostly for US citizens in Canada and US citizens moving to and from the US).

I know it can be difficult to find answers to cross border tax questions so I'm here to help as needed.

Cheers

Phil

[MariaR08]

Hi Phil!

I saw your post and a couple responses on other threads recently. I've been in business since 2008 but all my clients are U.S. residents with only U.S. source income... so needless to say, I don't have any experience with Foreign Income.

Recently I've been following an immigration message board and contributing with general tax questions like explaining what a nonresident/resident is, SSN/ITIN option, electing to be treated as a resident for tax purposes, etc. I know the very general idea of the Foreign Earned Income Exclusion and the Foreign Tax Credit.

I'm reaching out to you for some guidance and suggestions. I'd really like to help some of these people out and better explain the differences and requirements of the two and apply a more general/broad approach since I am keeping in mind every individual's (financial) situation is different.

For example, a foreign individual marries a U.S. citizen mid-year and moves to the U.S. late in the year, has foreign earned income and wants to know their options for filing. The basics I know are they would have the option to file MFJ with their U.S. spouse by electing to be treated as a resident for tax purposes (election statement under 6013g for being a NRA) and they have the option of applying the exclusion on their foreign income. There could be various twists to this situation such as being married and moving to the U.S. mid-year where they qualify under the substantial presence test to be a resident at the end of year (but NRA for the period before entry to the U.S.)... in which case 6013g wouldn't apply but rather 6013h.

I might be rambling now but the point is I'd like to learn more so I can help these people out. Do you have any suggestions on some good, updated material I could read up on and educate myself on the more specifics of the exclusion vs. credit and the 330 day count vs bonafide requirements, etc. (I know the IRS pubs are available but I'm looking for something written more in layman's terms.)

I've done a couple google searches and some articles are outdated and others don't have too much info/specifics. If you can point me in the right direction or even better if you have anything you've written up as a good breakdown I would totally appreciate it!

Thank you!
Maria

[Phil Hogan, CPA, CA]

Hi Maria

Thanks for the question. You likely have the answer right there. The 2 options being electing to file for the full year jointly or filing a dual status return (MFS) and taxing the income in a prorated basis. When the non-resident spouse enters the US and only has earned income it can be relatively straight forward to use the 2555 earned income exclusion.

However in many cases the individual has investment, pension and other income not eligible for specific exemptions. In that case it may be easier to prepare a dual status entry tax return (prorated part year) and continue with a full MFJ return in the subsequent year.

Hope that makes sense and please don't hesitate to ask if you have further questions.

Cheers

Phil

[Lion]

CCH publishes some great books and offers great webinars on international topics, both US citizens working &/or living abroad and non-US citizens moving to &/or working in the US, marrying a US citizen/green card holder, etc. Urge your local professional group to bring in a speaker on the topic if it has appeal in your area (many states near our borders as well as major metropolitan areas have such issues). Your interest in those on an immigration track suggest you might benefit from teaming with a good immigration lawyer. And, checking out where he/she gets his/her continuing education.

[Rapid Robert]

Sesquicentennial

There might be more Americans moving to Canada, I know I've thought about it after recently visiting Victoria and Vancouver. Happy Sesquicentennial! (2017)