CNDN Residency, Tax Filing Req. for working on a TN

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

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Jacobab
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Joined: Sun Apr 24, 2016 10:42 pm

CNDN Residency, Tax Filing Req. for working on a TN

Post by Jacobab »

Thanks for all the valuable pointers on this site for people like me who are working in the U.S. and learning about all the tax implications as we go.

I am a Canadian resident who took up employment in IL in May 2015 on a TN on a one year contract. The contract has been recently extended for another year. My wife and our two children remain in Canada. My wife and I own our house in Canada and we have joint bank accounts. I am continuing my OHIP coverage. I visit my family in Canada once a month.

My W-2 shows Federal & IL withholding as well as deductions for Fed OASDI/EE & Fed MED/EE. I used a U.S. tax preparer to file my 2015 U.S. tax. He filed a 1040, Schedule 8812 and IL 1040. I got roughly half of my Federal withholding back as a refund. I haven’t filed my Canadian tax return yet and have the following questions related to that:

1. Is it reasonable to assume that I will be considered a Canadian resident for tax purposes due to my ties with Canada (home, family, OHIP etc)?
2. In some of the posts I have seen that a 1040NR is filed by Canadians. I filed a 1040. Did I make a mistake? Do I need to re-file?
3. I thought it unusual to get back half the federal taxes I paid as a refund. Is it reasonable?
4. Based on some of the earlier posts I understand that for both the federal and IL taxes I paid, I will get Foreign Tax Credit. Also, I am allowed to deduct the Fed OASDI/EE & Fed MED/EE payments shown on the W-2. Is this a valid assumption?
5. If yes, which line do I use to deduct the Fed OASDI/EE & Fed MED/EE payments?

Your help is very much appreciated.

Jacob
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Post by nelsona »

1. Canada would no doubt still consider you a CDn tax resident.

2. Was your 1040 a "dual-status" 1040, or was it a normal one? If it was normal, you would have had to include your entire year's income, and if it was joint filing, then your spouse's income would also have to have been included. Also, special reporting would be needed for any Cdn accounts you have and the contents of those accounts, RESP, RRSP, etc. I would suggest that a 1040NR, using the special provision in the treaty article XXV(2) would have been a better filing for you. This is way out of the league of you local preparer. I also doubt that your children qualified for 8812 based on their living in Canada.

3. That depends entirely on (a) how much you were being (over) withheld, and (b) if you filed correctly.

4/5. Both the taxes CALCULATED on your US/state returns as well as the FICA withheld can be used toward the foreign tax credit on your CDn return.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Jacobab
Posts: 3
Joined: Sun Apr 24, 2016 10:42 pm

Thank you!

Post by Jacobab »

Thanks "Nelsona" for providing all this information so quickly. Truly appreciated.

2: The 1040 doesn't say anything about dual status. So, I assume it was a normal 1040. I didn't have any income in Canada in 2015 prior to this job in the U.S. Filing status on 1040 is indicated as "Married Filing jointly". However, only my income was included - not my wife's. I guess, 1040 was not filed correctly? This year, I hope it is ok not to file 1040NR again?

4/5: Can I simply add Fed OASDI/EE & Fed MED/EE payments to the Federal & State taxes when claiming foreign tax credit?

Also, to minimize taxes in Canada, are there any expenses I can / should claim? Specifically, moving expenses to the U.S., work space in the home expenses etc? Will getting a T2200 from my U.S. employer help?

Once again thank you for your help.

Jacob
nelsona
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Post by nelsona »

2. So you need to fix your 1040, as you essentially lied.
4/5 Isn't that what I said? FICA is all that alphabet soup you referred to. You will need to redo your taxes though before you know your actual US tax.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Post by nelsona »

You cannot deduct moving expenses to foreign work on your Cdn return, since, you remain resident, you really didn't move. They won't issue T2200 and it would NOT help.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Jacobab
Posts: 3
Joined: Sun Apr 24, 2016 10:42 pm

Post by Jacobab »

Thank you so much. Your help is very much appreciated.
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