"Shyster1040" <Shyster1040[at]nospamhotmail.com> wrote:

- quote -

Thanks for taking the time to reply. And I thought that our
Canadian tax laws were complicated!

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In general, provided that she did not have a green card
prior to her immigration on May 1, 2005, under the
substantial presence rules for determining residency, she
should be considered to have become a U.S. resident as of
May 1, 2005. See, e.g., Treas. Reg. 1.7701(b)-4(a)
(although if she stayed for less than 10 days the first time
she entered the U.S., went back to Canada, and then came
back and finally settled in, then her residency starting
date could be the date on which she finally re-entered for
good, provided, however, that not more than 10 days of
actual presence in the U.S. can be excluded from the count.
See Treas. Reg. 1.7701(b)-4(c)).

Since her U.S. residency most likely began on May 1, 2005,
her income for the calendar year 2005 would be prorated
between the period before May 1, 2005 and the period after.
See Treas. Reg. 1.871-13. With respect to the period before
May 1, 2005, she would be taxed as a nonresident alien
individual; i.e., she would, in general, only be taxed on
her U.S. source income, which in this case is likely to be
only the U.S. survivor's benefit. However, for that period
there may be a treaty benefit that would permit her to
exclude that amount from her U.S. source income; you'll have
to take a look at the U.S./Canada income tax and social
security treaties.

For May 1 2005 and after, she would be taxed as a U.S.
resident; i.e., on all of her world-wide income, which would
include all of the items you identified above.

With respect to return filing status, unless your client and
her husband elect to have her treated as a U.S. resident for
the entire year under Treas. Reg. 1.6013-7, they cannot file
a joint return for any part of 2005. See Treas. Reg.
1.6013-1(b). If that election is made, then all of her
income for the entire year of 2005 is taxed in the U.S.;
however, she would then qualify, as a general matter, for a
foreign tax credit for the taxes she paid to Canada on the
same income.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Moderator: MIME is a PITA. Please do not use MIME!

My client emigrated from Canada to the U.S. on May 1, 2005.
Yes, 2005. She married several days later. She remains a
U.S. resident. Her income consists of pensions from the
Canada Pension Plan, the Canadian Old Age Pension and a
survivor U.S. Social Security pension.

She filed, properly, a 2005 Canadian tax return covering her
income from Jan. 1 2005 to April 30 2005. It was assessed
with no problems.

She recently contacted the IRS re her 2006 return and
mentioned her immigration date in 2005. They indicated that
she/her new husband (she married in May/05) would have to
file an amended 2005 return.

Question: Does she have to declare ALL her 2005 WORLD income
on the U.S. 2005 return or just that income covering the
period SINCE her immigration to the U.S., i.e. May 1 to Dec.
31 2005? If she has to declare the ENTIRE year's income, is
she allowed credit for the taxes she paid on her CANADIAN
return for the time in 2005 PRIOR to her emigration to the
U.S.? I've advised her to seek professional advice, however
in rural Alabama they might not be totally up on such
situations involving immigration. Please offer me some
insight as my small practice doesn't see too many of this
type of case.

Dave B.

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >