NSERC Postdoctoral Fellowship in the US

user2013123 · Post by **user2013123** » Sat Jun 22, 2013 5:06 pm

Hi,

I was wondering if anyone here knows how taxation of an NSERC PDF grant works when the award tenure location is in the US. I know that the US taxes the award, but from talking to the CRA, it seems that NSERC must withhold tax because the payee is a non-resident.
The problem is that NSERC explicitly says that it does not collect tax and that it only issues T4A forms and not T4A-NR.

I was wondering if anyone has this figured out.

Thank you.

nelsona · Post by **nelsona** » Sat Jun 22, 2013 6:18 pm

You will still be considered Cdn tax resident, so you will owe tax only in canada. You will NOT be considered a US resident, so normal tax withholding will occur. You should not be taxed in US.

What will be your immigration status?

user2013123 · Post by **user2013123** » Sat Jun 22, 2013 6:22 pm

I think I am considered a US resident for tax purposes since I'm going to be physically in the US for most of the days during the two years of the award.

The status is either TN or H1B.

nelsona · Post by **nelsona** » Sat Jun 22, 2013 6:28 pm

That is whey I asked the status, which could justr as easily been F or more likely J.

If you are taxable in US, you will get credit for any Cdn tax (it will be flat non-resident tax) on your US return.

If you are becomeing non-resident (you have no choice if it is TN or H1) then look over the emigrant tax rules.

user2013123 · Post by **user2013123** » Sat Jun 22, 2013 6:33 pm

Thanks!
What about withholding?
NSERC says it does not withhold taxes, but CRA told me that there are mandatory withholding laws for non-residents. l

nelsona · Post by **nelsona** » Sat Jun 22, 2013 7:45 pm

Lets reset here.

Cdn Grants, even paid to non-residents, are considered taxable in canada, and effectively treated like employment performed in Canada. That certainly would be how it worked if you were now living in US and coming to Canada to work on that grant.

If NSERC doesn't wannt to acknowledge that they are paying a non-resident for work performed out of canada, I guess you will simply have to let then collect their regular tax. It will work out on your deperture tax return.

For US, IRS doesn't really care whwre you work for there taxes, so you will report it on your 1040, and use any Cdn tax you paid on your Cdn tax return on that income by using form 1116.

user2013123 · Post by **user2013123** » Sat Jun 22, 2013 10:10 pm

Thanks again for the information.
I will post here if learn anything new.