Hey TaxCycle Community!
I am doing a return for a client who was living in the states for roughly 5 years and in 2019 moved back to Canada and worked here. She has a couple of W2’s and a T4. While living and working in the US she would have been considered a US resident and as of her date of moving back to Canada she would be considered a Canadian resident. As such she is a part year-resident and I have appropriately set up her tax credits to be pro-rated.
What I require all your expertise on, is how to report the income from her W2’s? I couldn’t find much in the forum for how to do this. I don’t want to miss something crucial ie. SS tax withheld, Federal tax withheld, Medicare tax withheld, etc.
It seems to me that you currently seem to have insufficient evidence to determine the Residency period, and hence what reporting requirements apply.
If it were me, I would ask for evidence of, minimally:
Citizenship
Ties
Other family and work details
Copy of her 2019 USA Income tax return, which will force her to first establish her Tax Residency reporting from a USA point of view.
Examination of ITA S250(et seq) and the Canada-USA Tax convention
Exact dates of change of Tax Residency (if any) would thereby be determined.
.
IMHO, there is really no such thing as preparing tax returns (properly) on a “would have been considered” and “would be considered” basis, since these are firmly fixed by Fact and Law in a particular case, which first need investigation and substantiation.
They should be entered as the foreign income slips assuming she is resident in Canada. The tax paid is the amount assessed on the 1040 which is not necessarily the amount withheld.
Not sure if you need to report US income for part year residents.
Per US-Canada tax convention, Canadian residents do get foreign tax credit for US federal and state income tax assessed as well as social security and medicare taxes paid.
Sorry, that was my fault in explaining.
Based on all the evidence I obtained (many of the same items you note), I have determined her residency status. So in terms of posing the question above I should have said:
She was a US Resident for tax purposes until October of 2019 when she ceased to be a US resident for tax purposes and became a Canadian Resident for Tax purposes.
For that reason, given the other responses I believe I was incorrect in assuming she still needed to report her worldwide income earned. Instead she would have a 2019 US tax return and a 2019 Canadian tax return based on the period of her residency in each. Ie. Jan 1 - Sept 30 2019 - US and October 1 - Dec 31 2019.
"Sorry, that was my fault in explaining. Based on all the evidence…"
It sounds possible that that could be the correct position per your posted information.
Presumably this person is not married to a USA Resident or Citizen, in which case you might find the Tax Treaty and S250 might lead you down a different path.