Question about "Deemed Non-resident" Status

cwpling · Post by **cwpling** » Fri Dec 26, 2008 9:26 pm

Hi,

I am a little bit confused about the Deemed Non-resident status and am trying to figure out if I belong to that category.

I am a Canadian who left Canada in Aug 2006 to attend graduate school in the US. I finished school in Dec 07 and had worked in the US for the whole year in 2008 (I am on F1 OPT training during this time ).

I don't own a house in Canada and do not have a spouse, child or dependant. However, I did not sever all my ties with Canada and still have my bank account, RRSP account, driving license, and have not cancelled my OHIP yet.

During 2008, I have only returned to Canada once and stayed for about 9 days.

Will I be considered a deemed non-resident for my 2008 Canadian income tax purpose or am I a factual resident?

Thanks.

nelsona · Post by **nelsona** » Sat Dec 27, 2008 3:10 pm

A couple of questions first:

How are you being treated in temrs of your US taxes? As a student, you could NOT be a US resident, by treaty, so you remained a Cdn resident until at least dec 2007.

Once you bacame OPT, how did you declare yourself. The easiest way to answer this is: Are you paying FICA (SS and medicare) on your OPT wages? If not, then you are still considered Cdn resident. If yes, then you can treat yourself as Non-resident (pure non-resident), since you have little ties in Canada.

Deemed non-resident status does not apply to you, since you can't be considered resident of BOTH countries.

If you have become non-resident, because of now paying SS taxes, and this occured in Dec 2007, and you should be going back to your 2007 and declaring a departure date back then, not in 2008.

Som the question really becomes, when did you begin OPT, and are you paying SS tax?

As an aside, what status are you going to use once OPT is finished?

cwpling · Post by **cwpling** » Sun Dec 28, 2008 10:11 am

Hi nelsona,

Thanks for your reply.

I began OPT in Jan 08 and did not pay SS and medicare during all of 2008.

Once my OPT expires, I will have a H1B status.

Based on that, I should file as a resident for my 08 Cdn income tax and then as a non-resident for 09 (if I stayed in the US more than 183 days)?

nelsona · Post by **nelsona** » Sun Dec 28, 2008 10:16 am

Days of presence is not really important. You are a US resident from the moment you begin paying SS. So file normally for 2008, and then file a departure return in 2009, stationg your departure date sometime in January.

Good job getting h1, you were pretty lucky to win the lottery.

nelsona · Post by **nelsona** » Sun Dec 28, 2008 10:16 am

You still file 1040NR for US in 2008, and 1040 for 2009.

cwpling · Post by **cwpling** » Sun Dec 28, 2008 10:35 am

Thank you very much!

testone · Post by **testone** » Mon Dec 29, 2008 8:04 am

When does your visa change from F1 to H1-B? If the change is in 2009, you will be a dual resident for 2009.

nelsona · Post by **nelsona** » Mon Dec 29, 2008 8:47 am

Indeed, but by election, one always file full-year 1040 in a dual year. With change occuring so early in the new year, I see no set of circumstances in which it would be better to file dual status (which is part 1040NR and part 1040).

Thus the advice to file 1040 in 2009.

Thanks for the extra precision.

testone · Post by **testone** » Mon Dec 29, 2008 8:51 am

I agree that if someone is married they can elect to be treated as residents for the full year. However, for non-married individuals I don't believe such an election is available. The original poster indicated that he was not married.

nelsona · Post by **nelsona** » Mon Dec 29, 2008 9:00 am

Cdns generally use the non-discrim portion of the treaty to file 1040. This is done implicitly.

I gues your "testone" moniker is hiding your professional status.

Come clean ;0)

testone · Post by **testone** » Mon Dec 29, 2008 10:24 am

I am a tax professional. No intent to mislead.

I hadn't heard of using the nondiscrimination clause in a treaty in such a way.