Thank you in advance for your help.
I am Looking for guidance/advise from the experts on this forum in regards to US Tax filings. Here is my situation in 2014.
Canadian citizen, physically resident in Canada and commuting to the US for work on an H1 B Visa since 2011.
Do not pass the substantial presence test in the US.
US employer has filed for green card and the I-140 got approved in Mid-2014. The AOS (485) has never been filed since Priority date is not there yet.
My questions are:
1-Would I now be considered a resident in the US for tax purposes by virtue of the approved I-140? I have been filing 1040NR (Federal only) for the last 3 years considering closer connection to Canada (hope i was correct)
2- Since I am living in Canada, my employer does not deduct the State Taxes from the Payroll. Am I required to file any state tax return? If so, do i file based on the states where I worked (KY, NC) or state where my employer is registered (NY)?
Thank you for taking the time to read this and Happy Holidays !
US Tax Filing- Residency status
Moderator: Mark T Serbinski CA CPA
-
amerincana
- Posts: 5
- Joined: Sat Dec 27, 2014 11:54 am
- Location: Toronto
1. No, the Green card test means just that: Green card makes you US tax resident, so you can contue to file 1040NR.
2. State taxation is based on residency AND source, so you should be paying state tax in KY and NC for the work done there. If you lived in a third state, you would pay tax on all your income there, and KY and NC tax on your wages, which would then be credited on your home state return (juts like it now will be on your Cdn return.
You should have been filing in these states all along. What do your co-workers do?
2. State taxation is based on residency AND source, so you should be paying state tax in KY and NC for the work done there. If you lived in a third state, you would pay tax on all your income there, and KY and NC tax on your wages, which would then be credited on your home state return (juts like it now will be on your Cdn return.
You should have been filing in these states all along. What do your co-workers do?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
-
amerincana
- Posts: 5
- Joined: Sat Dec 27, 2014 11:54 am
- Location: Toronto
Thank you very much Nelsona for the advice.
1- The reason I asked about the residency status was because I was a little confused looking at the two conflicting information in the following IRS web pages-
a- cannot claim closer connection to a foreign country if there is an intent to change status (includes I-140)
http://www.irs.gov/Individuals/Internat ... gn-Country
b- exactly as you mentioned.
http://www.irs.gov/Individuals/Internat ... -Card-Test
Based on your response, it seems like 1-a does not apply to me as I do not have to invoke closer connection in the first place. Correct?
2- To clarify on the state taxes, the SOURCE of wages was my only employer based in NY. I was on consulting assignments in KY and NC, staying in hotels all the time. So I should file/pay taxes for NY, KY and NC and take the credit in Ontario Canada, where I live. Correct?
My coworkers are all US residents so its not an issue for them. And my Canada based tax adviser did not think this is something to be worried about either:(
Now that I know better, can I ask you please, if you have a recommendation on how best this can be remedied ?
Really appreciate your insight.
1- The reason I asked about the residency status was because I was a little confused looking at the two conflicting information in the following IRS web pages-
a- cannot claim closer connection to a foreign country if there is an intent to change status (includes I-140)
http://www.irs.gov/Individuals/Internat ... gn-Country
b- exactly as you mentioned.
http://www.irs.gov/Individuals/Internat ... -Card-Test
Based on your response, it seems like 1-a does not apply to me as I do not have to invoke closer connection in the first place. Correct?
2- To clarify on the state taxes, the SOURCE of wages was my only employer based in NY. I was on consulting assignments in KY and NC, staying in hotels all the time. So I should file/pay taxes for NY, KY and NC and take the credit in Ontario Canada, where I live. Correct?
My coworkers are all US residents so its not an issue for them. And my Canada based tax adviser did not think this is something to be worried about either:(
Now that I know better, can I ask you please, if you have a recommendation on how best this can be remedied ?
Really appreciate your insight.
1. You are not using "closer connection" to allow you to file 1040NR. Closer connection applies to those who meet SPT (over the 3 year period) but do not exceed 183 days in US in the current year. Form 8840 discusses this.
You are filing 1040NR because you (a) do not meet SPT, and (b) do not have a green card.
For employment, source is where you physically work. Doesn't matter where your employer's office is, if you aren't working there. For example, pro athletes pay tax in MANY states every year because they play 1 or 2 games in these states.
Since you say you do not work in NY, and all your work is done in KY and NC, then there should be no NY tax to pay, but you should be paying KY and NC tax, based on the days you worked in each state.
That is why your employer is not withholding NY tax (He should be withholding KY and NC tax, but that is another issue). If you went to the offices in NY, you would be liable for NY tax, even if you live in Canada.
Well, your co-workers pay state tax do they not? And I'm quite sure they pay it in the state they work, and in the state they live, if they are different. Wages are taxed in exactly the same manner if you are resident or foreigner.
Your Cdn tax adviser knows little about US tax system.
Youshould be concerned, because while you are paying CRA enough taxes (thus the no worry comment from your acct) you aren't paying any state tax. They collect tax too, and can come after you when the firms books are audited.
You are filing 1040NR because you (a) do not meet SPT, and (b) do not have a green card.
For employment, source is where you physically work. Doesn't matter where your employer's office is, if you aren't working there. For example, pro athletes pay tax in MANY states every year because they play 1 or 2 games in these states.
Since you say you do not work in NY, and all your work is done in KY and NC, then there should be no NY tax to pay, but you should be paying KY and NC tax, based on the days you worked in each state.
That is why your employer is not withholding NY tax (He should be withholding KY and NC tax, but that is another issue). If you went to the offices in NY, you would be liable for NY tax, even if you live in Canada.
Well, your co-workers pay state tax do they not? And I'm quite sure they pay it in the state they work, and in the state they live, if they are different. Wages are taxed in exactly the same manner if you are resident or foreigner.
Your Cdn tax adviser knows little about US tax system.
Youshould be concerned, because while you are paying CRA enough taxes (thus the no worry comment from your acct) you aren't paying any state tax. They collect tax too, and can come after you when the firms books are audited.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
-
amerincana
- Posts: 5
- Joined: Sat Dec 27, 2014 11:54 am
- Location: Toronto