Residential status for Canadian Taxes H1-B Visa Holder in US

This is a wonderful website and I am hoping I can get some advice. I have read a lot but I didn't seem to find a clear answer to my situation.

I moved to the US on TN visa in August 2007. For the year 2007, I filed my Canadian taxes as a resident and my US taxes as a non-resident (1040NR). I did not declare any foriegn income on both returns and I am not sure now that this was a right thing to do or not?

In 2008 I changed my work visa status in the US from TN to H1-B. I married a canadian in June 23rd, 2008 and she moved to the US with me right after this date with a H4 Visa. I have already filed a joint US taxes through HR block as US resident alien. I am not sure how to file my 2008 Canadian taxes yet? I noticed just recently that I have to file the NR-73 form. I don't have main residential ties in Canada. I still have Canadian checking bank accounts and a Canadian driver license. Also I have a HBP repayment obligation for the house that I sold in November 2007, right after I first moved to the US.

I received absolutely no income from Canadian sources in 2008. My wife is still a student, she received very little income in 2008 in Canada before she moved here. I am not sure what is the best way to claim my residential status with CRA. Do I have to do a tax return or just file the NR73 form. I figured the best way is for my wife to file her own taxes seperately? I am now aware of the tax treaty between Canada and the US and obviously I am trying to aviod paying foriegn income tax in Canada. Please let me know what is the best thing to do?

In 2007 you should have declared your worldwide income on your T1 and your US-source income on 1040NR, and claimed a foreign tax credit for the US taxes with your T1.

You don't file for Canada for 2008 if you've filed as a resident for the whole year, but you do need to tell the CRA that you left on 31st December 2007. The wrinkle here is your wife, she may need to file a pro-rated T1 for the portion of the year she was in Canada before she moved to the US. I'm not sure if you can file jointly for 2008 either, because she was a non-resident alien for several months, although it doesn't matter that much if she had no reportable income for that period. If she did, she needs to file dual-status and you need to file as an individual for 2008. Basically it boils down to whether she got a T4 for 2008 with a large enough income to be reported.

Bear in mind that now you are tax residents of the US, there is a heap of paperwork to be completed if you ever move back to Canada, as explained in IRS publication 519, which also covers how to file dual-status.

You don't need to file NR-73 unless the CRA specifically asks you to, you just need to tell them that you are no longer resident for tax purposes and ditto for any financial institutions you deal with in Canada.