US- Canada Taxation TN visa

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pran

US- Canada Taxation TN visa

Post by pran »

I am Canadian Citizen working for a USA company from April 2015. Almost 60% of the time, I work remotely from Canada as my wife works here in Canada.

Since I will be present less than 183 days in USA, Can I claim/declare myself as resident alien in USA and nonresident alien in Canada? Please advice
nelsona
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Post by nelsona »

No. You are still resident of Canada. Because your wife is in Canada (and you spend too much time there).

For you to be non-resident of Canada, you would have to be almost exclusively in US since April 2015 and for the future.
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pran

Post by pran »

Thanks for your reply. Is my 401k contribution tax deductible in Canada even if i do not have RRSP contribution limit?

Are any of my commuting expenses to USA tax deductible?
nelsona
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Post by nelsona »

Probably not. The permission to use 401(k) contributions comes at the expense of reducing your RRSP limit, which you say you have none.

It is best to not contribute to RRSP while funding 401(k).
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nelsona
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Post by nelsona »

No commuting expenses are allowed, since you are commuting from your home to your reqular place of employment. It's your choice to live that far from work.
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nelsona
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Post by nelsona »

No, you need to overwhelm your Cdn ties with US ones. With spouse living in Canada, that means spends NO TOIME in Canada, and her visting you. Otherwise, you show that your life is in Canada, and you merely work in US (and live there part-time solely for work).

It's the same as living in BC and commuting to Toronto: no deduction, and you pay BC taxes.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
pran

Post by pran »

If I do stay more than 183 days in USA, I will be considered as tax resident for USA based on substantial presence test.

Based on this, I cannot be considered tax resident of both the countries under us-canada tax treaty. Please suggest.
nelsona
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Post by nelsona »

Yes, 183 days in US merely makes you ALSO resident of US, but does nothing to break your Cdn residency. Now, being resident in both coutries brings the treaty into play, and that is why I said you need to overwhelm your ties in Canada by those in US. That means not only spending 183 days, it also mean having a full-fledged home where your spouse is known to live or visit regularly, club/church memberships, drivers license and car registration, etc. it's known as the centre of vital interests.


YOU need to be moving to US, and spouse needs to be preparing her move, for you to be Cdn tax non-resident.

Remember, a Cdn can file a US resident tax treturn any time they want, even without setting foot in US. But that does not absolve them of being a Cdn tax resident. Only breaking residential ties, and forming new ones in another country does.

By the way, even if you were somehow able to overwhelm your Cdn ties, this would not make your commute expensed deductible. It would simply be viewed as travelling to Canada to visit family.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
pran

Post by pran »

Thanks for your reply.

So in this case, I would be considered tax resident for both the countries. Would I file taxes in usa as a resident and then claim the taxes paid in usa as deduction on my canadian tax return? are social security taxes and medicare taxes deductible on my canadain returns?
nelsona
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Post by nelsona »

You would have a mixture of credits on both sides. The result would be a much more complicated US tax return, and no tax savings in Canada.

Use the XXV(2) 1040NR and you will do just fine. You are only trying to get your US taxrate just below your Cdn one.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
pran

Post by pran »

are social security taxes and medicare taxes deductible on my canadian returns?

Thanks
nelsona
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Post by nelsona »

Yes.

Tax season is in the spring. If you have planning questions, fine. But mechanics about returns are best left until then, or better yet, found by browsing this site. Nothing new in your posts.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
adeboloj
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Post by adeboloj »

Please correct me if I am wrong, I thought even staying more than 183 days in the U.S but strong ties in Canada i.e. family still living in Canada makes one a resident of Canada, so one should be able to use the 8833 form under the Canada - U.S treaty to file NR in the U.S and then only file as resident on Canada return for tax purpose rather than filing as resident in both countries?

By the way, which one is beneficial for tax break.
Filing as resident of two countries if one meets the condition or file as NR in U.S and resident in Canada or vice versa.

Thank you
nelsona
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Post by nelsona »

The most beneficial way for you to file is a 1040NR but using the treaty XXV clause to calculate a better US taxrate, in cases when you cannot use all your US tax as determined by 1040NR by itself.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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