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r_swift
Returning Member

Permanent Resident / Green Card holder. Live in USA but telecommute to Canada. Tips on how to file taxes.

Hello, I need some advice on how to file my taxes. In 2018 I moved to America and received my green card and am now a permanent resident. I work from home as an independent contractor telecommuting back to Canada, where I previously lived. All my earnings are in Canadian dollars. I resided in the US for all of 2019. 

I believe I am supposed to file a US tax return regardless of my earnings, which would be $0 USD. Last year I only filed taxes using TurboTax Canada and paid taxes in Canada.

My plan was to file two returns - one in Canada, claiming my earnings and paying what I owe. And one in America, stating the tax I paid on foreign currency. Or should I only be filing in America and claiming foreign currency? Any advice would be greatly appreciated. Thanks in advance! 

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3 Replies
pk
Level 15
Level 15

Permanent Resident / Green Card holder. Live in USA but telecommute to Canada. Tips on how to file taxes.

@r_swift ,

(a) once you have become a resident of the USA, your worldwide income comes under US tax system ;

(b) under US tax laws , the place where you work determines  the sourcing of the income - thus if your work is performed in the USA  but for a foreign entity  with no presence in the USA, your income would generally be  classed as US sourced/connected income and therefore taxed in the USA  - not eligible for  foreign  earned income  exclusion;

(c) Income earned  as self-employed    from a foreign entity  while living in the USA ( even if deposited into a foreign account in local currency )  and taxed by the foreign country , generally would not be eligible for foreign tax credit ( because the income is  NOT foreign ) -- to rectify this situation, one has to resource the income to "foreign"  ( asserting  US-foreign country tax treaty conditions ) to be able to recognize the foreign  tax and  credit thereon.  It is complicated and therefore generally services of tax professional  familiar  with international tax laws  is recommended

(d) in your particular situation, since Canada generally works on a "resident" basis for  income taxation, perhaps  you do not need to file a Canada return for the period that  you were not a resident of Canada

 

Hope this answers your query, generally.  

For more detailed answer  I would need your  days present in the USA during 2017, 2018 and 2019 plus the date on which you were admitted into the USA as a resident ( Green Card). Also are you married to a US citizen or a Canadian citizen?

 

 

r_swift
Returning Member

Permanent Resident / Green Card holder. Live in USA but telecommute to Canada. Tips on how to file taxes.

Thank you for your reply! I understand the situation is complicated and the information you provided is a great start for me. 

I moved to the US in Feb. 2018 to marry my husband, who is an American citizen. I received my green card about a year later at the beginning of Feb. 2019. Both years I only travelled outside the US for a few weeks on holiday. 

 

To summarize what you suggested, I would exchange my total CAD earnings into USD and claim that as my taxable income and file in America. I believe I am considered a nonresident of Canada, but it is not clear on whether I need to file as a nonresident or not. I did receive an NR4 from my Canadian bank. 

Thanks again for the help!

KarenJ2
Expert Alumni

Permanent Resident / Green Card holder. Live in USA but telecommute to Canada. Tips on how to file taxes.

As pk said, you will need to file a 2019 US resident return declaring your worldwide income  As a green card holder you must file annually and declare your worldwide income no matter where you live.

 

You will also need to file a 2018 tax return if you have not done so.  Even though you did not have your green card in 2018, you were in the US more than 183 days.  I assume your husband filed a married filing separately return for 2018. Maybe he can amend his 2018 return to file married filing jointly and include your income.

 

If you file jointly for 2018, you will need to include a statement attached to your 2018 return indicating that you want to file married filing jointly and you will include your worldwide income.  You will have to mail your amended return as amended returns cannot be efiled.

 

Please see the following link for more information on the statement that you need to attach.

Publication 519 US Tax Guide for Aliens  page 8

 

 

[Edited 02.23.20 | 12:53 pm]

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