T1 for an emigrated taxpayer

Naseem · ‎March 23, 2023

My client filed his first tax return for FY 2021 in Canada as a resident. He has now left Canada and moved permanently to the USA on July 01, 2022. He maintains his principal residence in the USA and rental property as well in the US and he has no intention of being back to Canada. He files his tax return in the USA regularly. Since he was working in Canada from January to June 30, 2022, he was issued a T4 and his tax was deducted and shown under box 22 in his T4. If I prepare his Canadian tax return I shall have to show him “NON-RESIDENT” as of 12/31/2022, Under Residency (province of residence on 2022/12/31) on the info page”.But I receive an error message (warning info) that if a taxpayer emigrated from Canada, you must select the province of residence on the date of departure. I don’t find any place in the info page profile in order to show his province of residence on the date of departure. I shall appreciate it if someone guides me to resolve this issue.

Further, Do I need to report his US rental income too, for the period when he was a resident (January to June 2022) under foreign income in his Canadian return?

dlarryhancock · ‎March 24, 2023

On the information page, on the right hand side is the Residency section

I believe that you will choose a Residency status as Resident, but also show a date of departure as 06-30

The first choice under Residency is Province of Residence and you should select the province there. I am not sure why you are not seeing that

As to the US rental income, yes report it. A Canadian taxpayer is required to report their worldwide income on their Canadian tax return. In your case he would not report any income on his Canadian tax return that is earned after June 30 but he would report ALL income prior to that date

Larry Hancock

RTS7 · ‎April 18, 2023

Hi there. I am also having the same issue.

How did you solve this problem?

On the info page you enter the departure date.
Followed by choosing residency status.
As an emigrant you will be a non-resident as of the date of departure.
Once you select non-resident under residency status a new box pops up, asking your country of residence on December 31st.

However the auditor says
"warning Info Select 'Resident' to ensure accurate tax calculations for an emigrant.

Any insight into this matter is greatly appreciated.

janisbossenberry · ‎April 18, 2023

If an individual was in Canada temporarily, worked, and received a T4, that individual files as a non-resident of Canada, not as a resident with an emigration date. The situation in the original question in this thread was clearly that of a non-resident. They had permanent ties in the US and filed a US tax return (presumably they were a US Citizen as well, but it doesn't really matter).

Article XV of the US/Canada Tax Convention covers employment in Canada by a US resident (or vice versa). If the US resident earns less than $10,000 Canadian through employment, they only report that income in the US. Also, if they are resident in Canada for less than 183 days, they only report the employment income in the US.

RTS7 · ‎April 18, 2023

Hi thank you for the reply.

We are not having an issue with the resident status.
We all agree that the tax payer is a non-resident.

However, when you choose non-resident within the program on the info page, the auditor gives you a warning saying to "select 'resident' to ensure accurate tax calculations for an emigrant".

I hope this makes it clearer.

Thank you in advance

janisbossenberry · ‎April 18, 2023

Do not put a date in the departure box. There should be nothing that is telling the program that they are an emigrant. Date of departure is only used for a resident leaving the country.