Tax question- kind of complicated

Hi,

My wife and I moved to the States last year, and she subsequently received her green card. For part of the year, pre-green card, she worked for a Canadian company paying CDN taxes. For most of the year, post-green card, she worked as an independent contractor for a Canadian company, from the States, with no taxes withheld. These funds were deposited, and remained, in a Canadian bank account. Finally, for part of the year, she worked for a US company as a resident alien of the US.

Now it's tax season, and we are confused...

It appears as though, for tax purposes, she would be filing in Canada as a "deemed non-resident" (i.e. she is now a permanent resident of the States, but maintains bank accounts, credit cards, and social ties in Canada because we plan on returning at the end of this year or shortly thereafter). However, she will also have to file taxes in the States. Which do we file first? And what income is reported to each country? Finally, and the biggest question- who is going to tax her currently un-taxed income? We're hoping it's taxed in the States, since the tax rates are so much lower, but we're nervous it will be taxed in Canada. If it is taxed in Canada, does anyone know how that works (i.e. if it's taxed in the States, there are plenty of self-employed deductions we can take to lower the overall tax liability... if it's taxed in Canada, will the CRA simply use our US taxes to determine what, if anything extra is owed in Canada, or will we have to refile with the whole amount and claim new deductions)? Finally, I know there is a tax treaty between the US and Canada that is supposed to exempt citizens going either way from double-taxation. Would that apply in this case?

Thanks, and any help appreciated. We just realized what a nightmare this might be a couple of days ago and are kind of spinning our wheels here, out of ideas.

forums.serbinski.com

deemed non-resident is treated EXACTLY the same as non-resident, which meeans departure return, deemed disposition, and non-resident taxation.

For dealing with tax, see teh forum above.