US citizen, Canadian PR - many tax questions

[dahauntz]

Hi all,

I landed in Canada in September 2018 and am a permanent resident. My common-law partner is a Canadian citizen and was formerly a US permanent resident, but she gave up her green card there when we moved to Canada.
Now, I have a lot of questions about taxes here, so apologies in advice for the text block!
1. Since the U.S. does not recognize common-law, I assume when I file my taxes in the states I will do so as single? Will my partner still need to file taxes in the states for 2018? How does that work if she is no longer a PR there?
2. Where do I file my taxes first? Canada or US?
3. Do we need an official common-law declaration here before we can file our taxes as common-law? My partner sponsored me as a Family (common-law partner) class, so I can only assume the government is all too aware at this point, but just want to make sure. Is there any other prerequisite before we file taxes, or is it enough as is?

If any of you know anything about this, please share your knowledge and experience. I hardly even know how taxes work in the US, lol. Thanks!

 

[Totoro1661]

Hi all,

I landed in Canada in September 2018 and am a permanent resident. My common-law partner is a Canadian citizen and was formerly a US permanent resident, but she gave up her green card there when we moved to Canada.
Now, I have a lot of questions about taxes here, so apologies in advice for the text block!
1. Since the U.S. does not recognize common-law, I assume when I file my taxes in the states I will do so as single? Will my partner still need to file taxes in the states for 2018? How does that work if she is no longer a PR there?
2. Where do I file my taxes first? Canada or US?
3. Do we need an official common-law declaration here before we can file our taxes as common-law? My partner sponsored me as a Family (common-law partner) class, so I can only assume the government is all too aware at this point, but just want to make sure. Is there any other prerequisite before we file taxes, or is it enough as is?

If any of you know anything about this, please share your knowledge and experience. I hardly even know how taxes work in the US, lol. Thanks!

Hello,

#1 - Short answer you can file jointly for Federal Form 1040 if you have common law status for CDN tax. US Federal honors the marital status at the jurisdiction you live in during that tax year.
If your partner has changed from a US person to a non-resident alien, the return becomes more complicated and you should definitely seek accountants' advice. Basically, she would have dual status (as both a US person and NRA) and need to file a dual status return, as well as informational return that she gave up green card.

For state returns, common-law might or might not be recognized (every state has its own rules, but my bias is a no). How the state return looks like is therefore also dependent on each states' laws.

#2 - Both. If you are a Canadian resident and a US citizen, you are taxed in both countries on your world wide income. To avoid double taxation, your returns should be prepared together by an accountant who are familiar with cross-border Canadian-US tax in order to correctly use the Tax treaty to reduce your tax burdens. I could definitely recommend a good one that's affordable if you live in Vancouver.

#3 - You do not need to notarize your common-law declaration to file CDN tax as common law, though there are conditions that you must satisfy. I'd check you CRA website, and also take a look at Form RC65 - Marital Status Change.

 

[MountainMan256]

Hello,

#1 - Short answer you can file jointly for Federal Form 1040 if you have common law status for CDN tax. US Federal honors the marital status at the jurisdiction you live in during that tax year.
If your partner has changed from a US person to a non-resident alien, the return becomes more complicated and you should definitely seek accountants' advice. Basically, she would have dual status (as both a US person and NRA) and need to file a dual status return, as well as informational return that she gave up green card.

For state returns, common-law might or might not be recognized (every state has its own rules, but my bias is a no). How the state return looks like is therefore also dependent on each states' laws.

#2 - Both. If you are a Canadian resident and a US citizen, you are taxed in both countries on your world wide income. To avoid double taxation, your returns should be prepared together by an accountant who are familiar with cross-border Canadian-US tax in order to correctly use the Tax treaty to reduce your tax burdens. I could definitely recommend a good one that's affordable if you live in Vancouver.

#3 - You do not need to notarize your common-law declaration to file CDN tax as common law, though there are conditions that you must satisfy. I'd check you CRA website, and also take a look at Form RC65 - Marital Status Change.

I do not know if this is 100% true if they can file jointly. I have been pondering this myself and I keep finding mixed information. The IRS claims that you must be in a relationship "denominated"/called as marriage if in a foreign jurisdiction. Common Law is different from marriage in Canada, even though under some laws in some provinces they can be labeled as a "spouse" like in BC, but upon further reading, they are not considered married as you need a official one for that to happen. where as in the states that do allow common law marriage equate the two.

"However, individuals who have entered into a registered domestic partnership, civil union, or other similar relationship that isn’t called a marriage under state (or foreign) law aren’t married for federal tax purposes." - https://www.irs.gov/publications/p504#en_US_2017_publink1000175821

"(2)Foreign marriages. Two individuals who enter into a relationship denominated as marriage under the laws of a foreign jurisdiction are recognized as married for federal tax purposes if the relationship would be recognized as marriage under the laws of at least one state, possession, or territory of the United States, regardless of domicile." - https://www.law.cornell.edu/cfr/text/26/301.7701-18

To add, I am not completely sure so you should look further on and tell me if you find any further information.

 

[dahauntz]

Can anyone recommend a tax accountant who is familiar with this in Saskatchewan?

 

[jes_ON]

1. Since the U.S. does not recognize common-law, I assume when I file my taxes in the states I will do so as single?
That's what I do...

Will my partner still need to file taxes in the states for 2018? How does that work if she is no longer a PR there?
If she lived/worked in the US for part of 2018, then yes, she will still need to file a return for 2018. I completely defer to Totoro on what happens with giving up PR status in the USA.

2. Where do I file my taxes first? Canada or US?
You kind of have to do them at the same time, and go back and forth. If you only have T4 income, it's not that bad. I usually work on my Canadian first, then my US return, and then go back and forth until finished. It is "responsible" advice to recommend a cross-border tax accountant, however, I find that to be prohibitively expensive and so I have invested the time to learn it myself. Learning about FBARs and FATCAs is unfortunately another reality.

3. Do we need an official common-law declaration here before we can file our taxes as common-law? My partner sponsored me as a Family (common-law partner) class, so I can only assume the government is all too aware at this point, but just want to make sure.
Assuming your CLP has filed previously in Canada, then she should submit the Change of Marital Status form...

Is there any other prerequisite before we file taxes, or is it enough as is?
Just know that as a first-time filer in Canada, you won't be able to file online, you will have to file on paper.

If any of you know anything about this, please share your knowledge and experience. I hardly even know how taxes work in the US,
EEK. If you have the money, it might be worth paying an accountant to be sure it is done right, at least for the first year.

Well, time to start wrapping your head around the FBAR...
https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar

 

[JPUSCA]

Hello,

#1 - Short answer you can file jointly for Federal Form 1040 if you have common law status for CDN tax. US Federal honors the marital status at the jurisdiction you live in during that tax year.
If your partner has changed from a US person to a non-resident alien, the return becomes more complicated and you should definitely seek accountants' advice. Basically, she would have dual status (as both a US person and NRA) and need to file a dual status return, as well as informational return that she gave up green card.

For state returns, common-law might or might not be recognized (every state has its own rules, but my bias is a no). How the state return looks like is therefore also dependent on each states' laws.

#2 - Both. If you are a Canadian resident and a US citizen, you are taxed in both countries on your world wide income. To avoid double taxation, your returns should be prepared together by an accountant who are familiar with cross-border Canadian-US tax in order to correctly use the Tax treaty to reduce your tax burdens. I could definitely recommend a good one that's affordable if you live in Vancouver.

#3 - You do not need to notarize your common-law declaration to file CDN tax as common law, though there are conditions that you must satisfy. I'd check you CRA website, and also take a look at Form RC65 - Marital Status Change.

Hi Totoro1661,

Would you recommend your cross border tax accountant in Vancouver area?

 

[teelad]

http://instagr.am/p/CaPzdKYsDMq/