Canadian/ Travel each week

helpwithtaxes · Post by **helpwithtaxes** » Wed Feb 26, 2014 12:34 am

Working for US employer under TN. I have a home office which I travel to on Monday and stay at thru the week, then travel back home to Canada on weekends.

Started in Jan 2013. I'm married with 3 kids but they stay in Canada as home is there wife works there as well.

1. Reading the closer connection form to calculate the days in the US you don't count travel days so in that case I'm in the US (3days * 52weeks) 156 days. Would I fill out the 1040NR with the closer connection form and not pay taxes in the US and only file in Canada?

2. Do I file single in the US or do I need to include my wife and her income?

3. Can I claim a deduction for my home office expenses?

Thanks

nelsona · Post by **nelsona** » Wed Feb 26, 2014 9:41 am

1. You should file 1040NR. No ned to file closer connection form, as the 1040NR has built-in equivalent form. Whether you would exceed the days or not, you are in effect makinga treaty claim of Cdn residence, which is correct.

2. You should file 1040NR, but use the treaty to be able to determine your taxrate by using a 1040. It is the XXV(2) provision of trhe treaty and is well-described elesewhere. Many Detroit-Windsor folk use this.

Any particular reason your employer makes you travel to US, but not to a place of employment? Seems to me it would be much simpler to just work out of your Cdn home, no? You wouldn't have to worry about US and state tax.

helpwithtaxes · Post by **helpwithtaxes** » Wed Feb 26, 2014 10:36 am

Nelson thanks form the reply.

Was told the client requires me to be located within the US when working on the contract.

So based on this I was hoping I could use my home office in the US as deduction on my US taxes?

nelsona · Post by **nelsona** » Wed Feb 26, 2014 10:48 am

I'm sure some expenses are deductible. See IRS Publication 587. What is probably not deductible is your travel.

But, does it matter? More important will be if You will be able to use the deductions on your Cdn taxes. That is where you will be paying the most tax.

As with anyone earning money in US and living in Canada, saving US tax is of little value after a certain point.

So, focus on the Cdn deductions.

helpwithtaxes · Post by **helpwithtaxes** » Wed Feb 26, 2014 11:57 am

You should file 1040NR, but use the treaty to be able to determine your taxrate by using a 1040

Wouldn't our tax rate already be set based on the tax I have taken off each pay? I'm not sure how I can change my rate rate at the time of filing?

Another question I have is about the difference that is take for the Social Security Tax vs the Max of CCP in Canada. Is there a way to get back SST paid in the US?

nelsona · Post by **nelsona** » Wed Feb 26, 2014 12:37 pm

Just like in Canada, the tax that is withheld from each pay has almost nothing to do with the exact tax that you owe. That is what your annaul tax return is for. I though that because you were asking about dedutions, you knew this already.
The taxrate on 1040NR, especially because you are married is terible compared to the married rate on a joint 1040; it can end up higher that the taxes you pay in Canada! The treaty allows you to prepare a fake 1040, including all your world income for both of you , to come with a taxrate that you then apply only to your US wages.

Because you are an employee in US, you pay SS tax. No choice on this. You have basically stopped paying CPP (again no choice) and are paying SS. You will get some SS at retirement. Just like you will get CPP.

The good news is that the SS and medicare tax you paid can be used toward the Cdn tax that you will owe on your wages, along with the IRS and state tax that you calculate on your return. Your withholding rate is meaningless.

nelsona · Post by **nelsona** » Wed Feb 26, 2014 12:39 pm

I guess you are seeing that your employer is really making your life difficult by making you sit at a desk in US. I hope he is compensating you for this trouble.

of course, you could jsut move to US

helpwithtaxes · Post by **helpwithtaxes** » Wed Feb 26, 2014 1:41 pm

Yes I agree its more difficult having to file in both places but based on this Form it looks like many people are doing it.

So to make sure I have it right I need to fill out the following.

1040 as joined married using my wife's Canadian Income and using her tax paid in Canada as Tax credit. Come up with Tax Rate? How to I do that and how to I move that into the 1040NR?

What can I use a tax credits/deductions on my 1040?

I also need to fill out a 8833?

nelsona · Post by **nelsona** » Wed Feb 26, 2014 2:18 pm

You do not get to use her Cdn taxes as a credit on the fake 1040. You treat all income as coming form US. You use any deductions that any other US taxpayer would have on 1040. You can find any software package that does this. You DO get to use her Cdn tax pais in calendar year 2013 as a deduction.

Please read up on the process in other threads.

Then you use that taxrate against your US wages on 1040NR.

I think you have a lot of work to do before you ask detailed process questions, which I typically don't answer anymore.