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Filing cross border tax ( CAN and USA)

Hello, 

I relocated from Canada to New Jersey, USA in July 2024 for work. From January 1 to July 5, I was employed in Canada, and from July 5 onwards, I have been working for my US employer. During this period, I returned to Canada to get married, and my wife has continued to earn Canadian income until August. She has not worked in the USA since our move. We both have RRSP accounts in Canada. I have closed my TFSA and FHSA accounts (and paid the associated taxes) before moving to the USA. My wife has approximately $1,000 in her TFSA and no FHSA.

Given that I have not stayed in the USA for more than 180 days in 2024, I do not believe I am a US tax resident for that year. Could you please provide guidance on the steps we need to take to file our taxes? Any help is appreciated.

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1 Reply
KeshaH
Expert Alumni

Filing cross border tax ( CAN and USA)

You're correct that you don't meet the substantial presence test for 2024 since you were in the US for less than 183 days. This means you'll be generally be considered a nonresident for US tax purposes for 2024. However, you could choose to be taxed as a dual status individual since you would meet the substantial presence test for 2025. See more information about the First Year Choice for Dual Status Residents here. You can figure your tax under both methods and see which option is most advantageous.

 

As a nonresident, you'll only need to file a US tax return (Form 1040NR) reporting your US source income earned after you moved to the US. Your wife would also be a nonresident. If she has no US-source income, she won't need to file a US tax return at all. 

 

If you choose to be treated as a dual status resident, you would file a Form 1040 for the period of time that you were in the US, after July 5. You can't file the 1040 until you meet the Substantial Presence Test in 2025. Based on when you entered the US, you won't meet the SPT by April 15, so you would need to file an extension and wait until the SPT is met before filing if you choose to be treated as a dual status resident.

 

See:

- Dual Status Individuals

- Taxation of Dual Status Individuals

- Substantial Presence Test

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