Moved from USA to CANADA

[pallavi_980]

Hello,

We moved from USA to Canada as permanent residents to settle down. In USA we were on work visa for several years. We passed substantial presence test for the  tax year of 2024 too.

1) Can we file tax in USA as Resident alien instead of dual status alien (1040) ?

2) We don't have Canadian income for the year of 2024. But i understand we still need to file taxes. Can we file taxes as residents? Can we be residents at both countries for tax purposes?

Thank you

[Vanessa A]

If you because a resident of Canada on or before December 31st, then you would need to file as a dual resident alien.  

Residency ending date under the substantial presence test

In general, if you meet the substantial presence test, your residency ending date is your last day of presence in the United States followed by a period during which:

1. You are not present in the United States,
2. You have a closer connection to a foreign country than to the United States, and
3. You are not a resident of the United States during the calendar year following that of your last day of presence in the United States.

Under the general rule, the residency ending date is December 31 of the calendar year in which you left the United States.

However, your residency ending date is the last day during the calendar year that you are physically present in the United States if, for the remainder of the calendar year:

• your tax home is in a foreign country (cf. Rev. Rul. 93-86); and
• you maintain a closer connection to that foreign country than to the United States (cf. Treas. Reg. § 301.7701(b)-2(d)).

For your Canadian question, our tax laws are very different, however, there is a Canadian TurboTax that you can post your question to them. 

[pallavi_980]

Hi,

Thank you so much for the reply. While waiting for this reply i found another thread 

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/moved-from-usa-to-canada-in-augu...

But that post suggests to file as Resident alien but not dual status resident. What am i missing here ? How to decide which is the correct option?

Looking forward to hear from you. Thank you 

[DaveF1006]

According to the Substantial Presence Test, you may file as US resident if you meet the terms of the Substantial Presence Test. The test doesn't require you to be a resident on the last day of the year

[pallavi_980]

Hi Dave,

Thank you for getting back . I am concerned then what is the use case for below description.

Residency ending date under the substantial presence test

In general, if you meet the substantial presence test, your residency ending date is your last day of presence in the United States followed by a period during which:

1. You are not present in the United States,
2. You have a closer connection to a foreign country than to the United States, and
3. You are not a resident of the United States during the calendar year following that of your last day of presence in the United States.

Under the general rule, the residency ending date is December 31 of the calendar year in which you left the United States.

However, your residency ending date is the last day during the calendar year that you are physically present in the United States if, for the remainder of the calendar year:

• your tax home is in a foreign country (cf. Rev. Rul. 93-86); and
• you maintain a closer connection to that foreign country than to the United States (cf. Treas. Reg. § 301.7701(b)-2(d)).

Note: An "exempt individual" is not considered "present in the United States" for purposes of determining the residency ending date under the substantial presence test. This rule may result in situations in which a person who was once a resident under the substantial presence test and later becomes an "exempt individual," can become a nonresident once more without ever having left the United States. See Example 6 in Tax residency status examples.

Looking forward to hear from you. 

Thank you

[DaveF1006]

Since the substantial presence test doesn't specifically exclude you from filing as a US resident for the entire year, I stand by original advice whereas  you may make the choice on fling as a resident or to file as a dual-status citizen. In other words, you may choose to be an exempt person from the time you physically left the US or declare yourself a US resident for the entire year. To declare yourself as an exempt person, is your choice and not a mandatory election.

If you choose to be exempt for the remainder of the year, you must file a form 8843 with your tax return to declare yourself as exempt for the remaining time not spent in the US.