23 Do you think it's even possible to DIY this stuff with tax software? I've been using TurboTax for my US returns and SimpleTax for Canadian, but I'm moving to the US next month and wondering if I should just bite the bullet and pay for a professional.

I wouldn't recommend DIY for cross-border situations, especially in your first year of moving. The tax software you mentioned (TurboTax and SimpleTax) aren't designed to handle the complexities of dual filing requirements, foreign tax credits, and treaty provisions between the US and Canada. I tried to do it myself initially and made several costly mistakes - missed foreign tax credit opportunities, incorrectly reported my Canadian retirement accounts, and didn't properly handle the timing of my residency change. The penalties for errors on international forms can be severe, and the IRS is particularly strict about foreign account reporting. For your first year, I'd strongly recommend getting professional help to establish the proper framework. Once you understand how everything works together, you might be able to handle simpler years yourself, but that initial transition year is just too complex to risk doing wrong.

This is excellent advice about starting early! I'm actually in the planning phase right now (move isn't until spring) so this timing tip is really valuable. Can you elaborate on what you mean by "departure tax calculations"? I keep seeing references to various tax implications when leaving Canada but I'm not clear on what specific calculations or forms are involved. Also, did your accountant help you with any pre-move planning around timing of income or asset sales? I'm definitely going to start interviewing specialists now rather than waiting. The flat fee vs hourly billing insight is particularly helpful - I hadn't thought about how that might affect their approach to the complexity of the situation.

Great question about departure tax! When you cease to be a Canadian resident, Canada treats it as if you've sold all your assets at fair market value on your departure date - this creates a "deemed disposition" for capital gains purposes. You don't actually sell anything, but you may owe tax on any unrealized gains. There are some exemptions (like your principal residence and certain retirement accounts), but things like non-registered investment accounts, rental properties, etc. can trigger significant tax bills. The good news is you get a "step-up" in cost basis for Canadian tax purposes if you ever return. My accountant definitely helped with pre-move planning. We timed my departure for early January to keep my high-income year fully in the US (better tax rates), and I sold some losing positions before leaving Canada to offset gains from the deemed disposition. We also looked at whether to contribute to my RRSP before leaving (spoiler: we didn't, as it would complicate US reporting). The planning aspect is where a good cross-border specialist really earns their fee - the actual tax return preparation is just documenting decisions you should have made months earlier!

Also make sure you're mailing to the right IRS address! They have different processing centers depending on your state and what forms you're filing. I sent mine to the wrong place and it added months to the process.

This is incredibly helpful, thank you! I'm dealing with a similar situation right now. Quick question - when you mention including a cover letter explaining the ID number change, did you attach this to each tax return you mailed in, or just send it once with all the returns together? Also, how long did it take for your returns to show up on the tax transcripts after you filed them? I'm trying to plan out the timeline for getting my payment plan set up.

@e7127ccef07c I included the cover letter with each return I mailed - basically a one-page explanation that my spouse's identification changed from ITIN to SSN after the tax year ended, so the return reflects the ID number valid at that time. I figured it was better to be redundant than have one return get separated from the explanation. For timing, it took about 8-10 weeks for the returns to show up on my tax transcripts after I mailed them (this was during tax season though, so processing was slower). I'd recommend checking your transcripts every few weeks once you hit the 6-week mark. One heads up - even after the returns showed on the transcripts, it took another 2-3 weeks for the online payment plan system to recognize that all my returns were filed. The IRS systems don't always sync up immediately. I ended up calling (well, using one of those callback services someone mentioned above) to confirm everything was ready before applying for the payment plan. The whole process from mailing returns to getting payment plan approval took about 4 months for me, but now I have peace of mind knowing everything is properly handled!

RIP to your afternoon fam

update: they hung up on me after an hour 🤮

Good reminder! I learned this lesson the hard way. Had a client in California who sold part of their business and we handled all the federal forms correctly but completely missed the state requirements. Ended up with penalties that wiped out a chunk of their sale proceeds.

This is really helpful, especially the point about business segment classification. I'm curious about one thing though - you mentioned that customer lists can sometimes be Class V depending on specifics. What factors determine whether a customer list goes in Class IV versus Class V? Is it based on how the list was developed or the nature of the customer relationships? Also, when you say the continued operation makes coordination more important, are you thinking the IRS might question whether other intangible assets (like ongoing customer relationships for retained clients) should have been included in the sale allocation? I want to make sure I'm not missing anything that could create problems down the road.

Great question about the Class IV vs Class V distinction! Customer lists typically go in Class IV as Section 197 intangibles, but they could potentially be Class V (goodwill and going concern value) if they're so integral to the business that they represent the expectation of continued customer patronage rather than just contact information. The key factors are: (1) whether the list has independent value beyond just names/contacts, (2) the nature and duration of customer relationships, and (3) how the list was developed. A highly curated client list with long-term service contracts would lean more toward Class IV, while a basic contact database might be harder to separate from general goodwill. You're absolutely right about the coordination concern. The IRS might question whether the seller retained any intangible value related to customer relationships, especially if they're continuing to service some of the same market. They could argue that ongoing customer relationships or market presence should have been allocated as part of the sale. I'd recommend being very specific in the purchase agreement about exactly which customer relationships transferred and which remained with the seller. Documentation showing clear separation of the customer bases will be crucial if this ever gets scrutinized.

Yes, Venmo operates under the same rules as PayPal for 1099-K reporting (they're actually owned by the same company). If you exceed the threshold, you'll receive a 1099-K from Venmo. And absolutely, Venmo fees are deductible business expenses just like PayPal fees. Treat them exactly the same way - report your gross income and deduct the fees as a business expense on Schedule C. Just make sure you're using a business profile on Venmo for your side gig transactions to keep everything clean and properly documented!

This is really helpful advice! I'm just getting started with understanding all this tax stuff for side businesses. Quick question - when you mention deducting a portion of internet bill, how do you actually calculate what percentage you can claim? Is it based on time spent working vs personal use, or square footage if you have a dedicated workspace, or something else? I want to make sure I'm doing this correctly and not overstepping any boundaries with the IRS.