better to earn 10000 instead of 10500?

[nancywang1991]

Hi everyone,

I am a Canadian citizen working in US as non-resident alien for a summer internship. Currently, I will be earning 10500 dollars by the end of the summer. According to the Canada-US treaty clause XV, if I earned less than 10000 dollars, then I should not be taxable by the US government. In this case, would it actually save me more money in the long run to ask to "end" my work earlier and earn 500 dollars less from my employer than to be taxed by at least 10%?

Thanks in advance!

[nelsona]

I wouldn't worry too much about it, but for $500, I would stop below $10K.

You will still have to pay fed, state, SS, and medicare, and these will be withheld. By earning less than $10K, you will be refunded the fed tax, but you will still have to file a 1040NR to get it back. and a state return to calculate final state tax. I'm sure your fed tax will be considerably less than 10%.

You will of course have to report the wages in Canada and be fully taxable there. any tax you owe in US will be credited on your Cdn return. So it comes down to what your Cdn tax rate will be.

[nancywang1991]

[quote="nelsona"]I wouldn't worry too much about it, but for $500, I would stop below $10K.

You will still have to pay fed, state, SS, and medicare, and these will be withheld. By earning less than $10K, you will be refunded the fed tax, but you will still have to file a 1040NR to get it back. and a state return to calculate final state tax. I'm sure your fed tax will be considerably less than 10%.

You will of course have to report the wages in Canada and be fully taxable there. any tax you owe in US will be credited on your Cdn return. So it comes down to what your Cdn tax rate will be.[/quote]

Thanks for the reply! I thought I read somewhere though that the US tax rate is at least 10%?

[nelsona]

SS and Medicare will be about 7%, nd your state tax will vary. Your fed tax will be less than 10% but over all it will be more.