Canadian Postdoc in USA - paying taxes w/ income from both countries

[Iman_day]

Hi all,

There's a very useful thread here for Canadian students in the US with income from both Canada and US: 

 

My situation is somehow different from what is discussed in that one. The main difference is that I am Canadian citizen working in US as a "postdoc", and since postdocs don't pay tuition fees, almost all their incomes are taxable in Canada.   In fact, only $500 of a postdoc scholarships is tax-free (https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-130-other-income.html).  

I am in the US on a J1 visa since January 2016. I received an FRQNT postdoctoral scholarship from Quebec over a twenty-month period. I've also received some funding from the US university. I just finished my second year of stay in the US, while the Quebec scholarship ended on August 2017, and since then I am fully paid by the US university.

The Quebec scholarship required me to keep my Quebec health insurance during the validity period of the scholarship (until august 2017). For 2016, I was considered as non-resident in the US, so I filed my Canadian return as a resident of Canada, with world income and I got some foreign tax credit for the tax I paid in the US. For the US return, I didn't report my Canadian income. 

For this year, I'm considered as a "resident for tax purposes" in the US. Very likely, due to my Quebec health insurance, I'm also considered as a resident of Quebec and Canada for the first 8 months of 2017 and I have to report both salaries for both countries. I should normally be eligible for a foreign tax credit in the US for the tax I pay to Canada and vice versa.

Now, the question is what should be the order of filing returns?

I can prepare a "tentative" US tax return based on my US and Canada income. Then, I can use the tentative US tax to determine my Canadian tax. Then, based on the Canadian tax, I will adjust the US return by taking into account the tax credit that I receive in the US for the tax that I paid to Canada.  My only concern is that after doing so, due to the foreign tax credit, I might end up paying less tax in the US than the amount that what was used to produce the Canadian return (based on the tentative US return). This seems to be a never-ending loop. 

Has anyone ever been in a similar situation? Am I missing something? Is any of my assumptions wrong? 

Thanks for any help...