Complicated Cross Border Tax Situation Between US and Canada - Need Help!

Hey there! I actually went through something similar when I moved from Chile to the US a few years ago. Here's what I learned that might help you: For your substantial presence test question - yes, you're almost certainly a US tax resident for 2024. The formula counts all days in the current year plus 1/3 of days from the previous year and 1/6 of days from the year before that. With your history (5 months in 2022, 7 months in 2023, plus half of 2024), you definitely exceed the 183-day threshold. Regarding state taxes, Illinois will definitely require a part-year resident return. Texas has no state income tax, so nothing to file there - that's actually simpler than most cross-border moves! You absolutely need to file a departure declaration with Mexican tax authorities (SAT). This officially changes your tax status and prevents Mexico from trying to tax your worldwide income. Without this, Mexico might still consider you a resident for tax purposes despite living in the US. For your Mexican SRL dividends, you'll likely owe US tax on those as they're part of your worldwide income. Mexico will probably withhold tax at the source (usually around 10% under the US-Mexico tax treaty), and you can claim a foreign tax credit on your US return to avoid double taxation. The health insurance card by itself shouldn't affect tax residency, but it's one factor immigration might consider. Tax residency is more about where you physically live and your permanent ties. I'd definitely recommend a cross-border tax specialist. This is complicated enough that DIY could lead to expensive mistakes. Look for someone who specializes in US-Mexico tax issues.

I was in a similar situation last year and used https://taxr.ai to sort out my complicated cross-border mess. My situation wasn't identical (I moved from Canada to the US), but there were a lot of the same elements - foreign business income, questions about substantial presence, and multiple state issues. What helped me most was their document analysis service - I uploaded all my tax forms from both countries, and they produced a really detailed report explaining exactly what needed to be filed where, and identified several tax treaty benefits I would have missed. They even caught that I was eligible for a foreign tax credit that my previous accountant had missed completely. For your Mexican SRL situation, they'll be able to tell you exactly how that should be handled on both sides of the border. When I uploaded my Canadian corporation documents, they explained all my options (keeping vs. dissolving) with the tax implications of each.

I tried taxr.ai after seeing it mentioned here and I'm honestly shocked at how helpful it was. I was extremely skeptical at first (as you can see from my previous comment), but decided to give it a shot since my situation with holding a German GmbH while living in the US was causing me huge headaches. The document analysis was incredibly thorough. They identified that I needed to file specific foreign corporation forms (5471) that I had no idea about, and explained exactly how my GmbH income should be reported to avoid double taxation. They even pointed out that I was eligible for the Foreign Earned Income Exclusion for part of the year, which saved me over $15,000! What impressed me most was how they broke down the tax treaty articles that applied to my specific situation. No generic advice - it was all tailored to my exact circumstances. I was able to take their report to my regular accountant who implemented their recommendations, and it saved me a ton compared to hiring a specialized international tax firm.

For your question about SAT tax issues following you to the US - I had a similar problem when I moved from Brazil to the US with unresolved tax issues. After months of trying to call the Brazilian tax authority with no success, I used https://claimyr.com to finally get through to the IRS. You can see how it works here: https://youtu.be/_kiP6q8DX5c I know they specifically help with IRS calls, but the agent I spoke with actually had experience with international tax issues and gave me advice about handling the Brazilian side too. They got me a callback from the IRS in under 2 hours when I had been trying for weeks. The IRS officer explained exactly what documentation I needed to provide regarding my foreign tax situation and credits. She even gave me the specific forms needed to properly report my previous foreign tax issues. This was crucial because I was worried about potential penalties for not properly reporting my Brazilian business interests.

I was extremely skeptical about Claimyr (as you can see from my previous comment), but I ended up trying it out of desperation after spending HOURS on hold with the IRS trying to sort out how to report my Mexican rental income and previous foreign corporation. I'm honestly shocked to say it works exactly as advertised. I got a call back from an actual IRS agent in about 90 minutes. The agent was incredibly helpful and walked me through exactly how to report my foreign business interests, what forms I needed (turns out I needed form 8832 and 5471 that I'd never heard of), and how to properly claim foreign tax credits for taxes already paid in Mexico. This solved half my problem - understanding my US obligations. For the Mexican side, I ended up hiring a tax specialist in Mexico City who cleared up my SAT issues, but I wouldn't have even known what questions to ask him without first understanding the US side of things. If you're struggling with the cross-border complexity, definitely use this service to at least get clarity on the US reporting requirements. It saved me countless hours and potentially huge penalties.

Regarding your Illinois/Texas situation - I moved from Texas to Illinois last year too! Here's what you need to know: 1. Texas has no state income tax, so you don't file anything for Texas. 2. For Illinois, you'll file a part-year resident return (IL-1040). You'll only pay Illinois tax on: - Income you earned while physically working in Illinois - Income you earned anywhere after becoming an Illinois resident There's a specific schedule (Schedule NR) where you allocate your income between the time you were a resident and non-resident. One thing to watch for: Illinois doesn't have reciprocity with any other states, so if you worked remotely for an Illinois company while living in Texas, Illinois might try to tax that income. Make sure you have documentation showing where you were physically located when working.

For your question about FBAR and Form 8938 - yes, you absolutely need to report your Mexican financial accounts to the US government if they meet certain thresholds! FBAR (FinCEN 114) is required if your combined foreign accounts exceeded $10,000 at any point during the year. This includes your Mexican checking account and any other financial accounts. The deadline is April 15 with an automatic extension to October 15. Form 8938 has different thresholds depending on whether you're filing single or married and whether you live in the US or abroad. For a single person living in the US, you'd file Form 8938 if your foreign assets exceeded $50,000 on the last day of the year OR $75,000 at any time during the year. Don't skip these filings! The penalties are insanely high - up to $10,000 for non-willful violations and potentially criminal penalties for willful violations. And one final thing: your Mexican SRL might require additional reporting on Form 5471 if you own a certain percentage. This form is incredibly complex - another reason to get professional help.