Am I eligable for tax return under TN status?

eVITAERC · Joined: 16 Jul 2010 Posts: 2

I'll be starting a 3-month contracted internship for a US company under TN status starting next week. During this time I'll be staying in the states for a total of under 90 days. However, the firm has a policy of withholding 25% of my paychek for US federal tax purposes. Seeing as how my tax home is in Canada, am I eligible to claim all of it back? Do I have to submit a US tax return to do so?

nelsona · Joined: 27 Oct 2004 Posts: 5917 Location: Nowhere, man

You will submit a 1040NR.
If you were considered an employee, you will pay US tax (and should have Fica deducted on paycheck) at the rates determined by 1040Nr.

If you are considered self-employed (doesn't sound like it) then you will report the income, and then exempt it by treaty. There should be no US tax owing.

Depending on the state you are working in, you likely have to file a state return as well.

In anycase, any tax you finally pay (plus any fica) will be considered foreign tax eligible ofr credit on your Cdn return, when you report the income on it.
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nelsona · Joined: 27 Oct 2004 Posts: 5917 Location: Nowhere, man

I neglected to mention -- since typically TNs working for 3 months make more than $10K -- but if your US wages are less than $10K for the calendar year, you can exempt the income when filing the 1040NR. You will still be on the hook for any fica.

Just as a general comment tough, just because your taxhome is in canada, doesn't automatically mean thatincome earned in US isn't taxable in US. All it means is that income earned anywhere will ALSO be taxed in canada.
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nelsona non grata... and non pro

eVITAERC · Joined: 16 Jul 2010 Posts: 2

Thanks a lot! That really helps knowing which form to look up. I'll be working in Texas, so I guess no personal income tax applies.

I guess this form is due as usual on tax day the following year, same as everyone else?

nelsona · Joined: 27 Oct 2004 Posts: 5917 Location: Nowhere, man

Since you will be due a refund, I'm sure you will be wanting to submit it as soon as you get your W-2.

Do you typically wait until the last minute to file?
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nelsona non grata... and non pro