[Jacob73]

Hi, I was on F-1 visa in the USA from 08/2009 - 08/2015. I filed taxes as a non-resident alien for 2009 - 2013 years (5 years). For 2014 year I filed as a resident alien (as 5 year exemption for F-1 students was over). I moved to Canada and had income in the rest of 2015 (09/2015 - 12/2015). My questions: What is my filing status for 2015 taxes? Do I have to report my Canadian income to IRS? I am married and have kids. In case of several options, what is the best from(s)/status to use? Thanks

[AtlantaTaxExpert]

You have TWO options; You can:

1) File an expatriate dual-status return. On such a return, you CANNOT claim ANY standard deduction. You CAN claim your wife and children as dependents, but this is NOT a joint return. Since you are married, you will be taxed at Married Filing Separate tax rates. Provided your income is not too high, you can claim the Child Tax Credit at $1,00 per child. You will report and pay taxes ONLY on the income earned in the United States. This dual-status return consists of Forms 1040 AND 1040NR, and MUST be mailed.

OR

2) File a joint resident return with your wife and claim your children as dependents. You will probably qualify for the Child Tax Credit (depending on your income). You will be taxed at the joint tax rates, AND you can claim the joint standard deduction ($12,600). However, you MUST claim all world-wide income, which means including the income earned in Canada up to 31 December 2015. You can file Form 1116 to claim the Foreign Tax Credit for the income taxes paid to Canada AND to the province in Canada where you worked and lived. This return can be filed electronically.

You need to model the return BOTH ways to determine which is the best option tax-wise.

In either case, you must also submit a Residency Termination Statement (RTS). The RTS is mailed as part of the dual-status return, or is mailed separately if you file a joint return. The deadline to mail the RTS is 30 June 2016.

The dual-status return is NOT for amateurs. Get a qualified tax professional with experience in filing such returns if that is your choice.

If you want MY professional help, please email me at the email address in my profile.

[Jacob73]

Thanks for very valuable information.

Since I was on a F-1 visa, do I still need to submit a RTS? Also, can I first file taxes and then send RTS (if it's needed)?

[AtlantaTaxExpert]

You became a resident on 1 January 2014 and confirmed that fact by filing as a resident for the 2014 tax year, so, yes, the RTS IS required.

And, yes, you can file the return and mail the RTS separately.

[Jacob73]

Another issue answer to which is not that clear.

I had income in Canada and I paid Canadian taxes, but when I file Canadian taxes the tax amount could change. Should I first file my Canada taxes and see what I get before reporting foreign taxes in Foreign Tax Credit Form 1116? Or in simple terms what I do first, Canadian taxes or US taxes?

[AtlantaTaxExpert]

File the Canadian taxes first to lock down what your Canadian tax obligation will be, then file the U.S. tax return.