Hi everyone,
I am extremely confused about a few tax issues. Please help!
I am a Canadian citizen studying in the US on a F-1 visa with residential ties (i.e. my parents) in Canada. I am therefore a non-resident alien in the US and a factual resident in Canada.
I have stock investments in US companies through both a US broker and a Canadian broker. Do I need to report capital gains on both my US and Canadian federal tax returns? Wouldn't I be taxed twice in that case? I understand that there is a treaty to prevent double taxation, but I'm having a hard time interpreting it.
I would greatly appreciate some help!
Best,
ytbai
US/Canada tax help
Moderator: Mark T Serbinski CA CPA
F-1 visa : You are a Nonresident Alien (NRA) for tax purposes in USA
For capital gains you need to determine if it's USA source income or Canadian source income..
Since your home is in Canada, for tax purposes your capital gains are considered Canadian sourced and are therefore not taxable in USA.
If that's your only income you don't have any filing requirements..
If US tax were withheld than you would need to file a 1040NR to recover the withheld tax.
In canada you need to declare your capital gain and you shall be taxed only in Canada.
For capital gains you need to determine if it's USA source income or Canadian source income..
Since your home is in Canada, for tax purposes your capital gains are considered Canadian sourced and are therefore not taxable in USA.
If that's your only income you don't have any filing requirements..
If US tax were withheld than you would need to file a 1040NR to recover the withheld tax.
In canada you need to declare your capital gain and you shall be taxed only in Canada.
[quote="Chkronos"]F-1 visa : You are a Nonresident Alien (NRA) for tax purposes in USA
For capital gains you need to determine if it's USA source income or Canadian source income..
Since your home is in Canada, for tax purposes your capital gains are considered Canadian sourced and are therefore not taxable in USA.
If that's your only income you don't have any filing requirements..
If US tax were withheld than you would need to file a 1040NR to recover the withheld tax.
In canada you need to declare your capital gain and you shall be taxed only in Canada.[/quote]
Thank you so much! Just to clarify: I have capital gains from both US stocks and Canadian stocks. Are they all considered "Canadian source income" under the treaty? It seems strange that gains from US stocks would be considered "Canadian sourced". Thanks again!
For capital gains you need to determine if it's USA source income or Canadian source income..
Since your home is in Canada, for tax purposes your capital gains are considered Canadian sourced and are therefore not taxable in USA.
If that's your only income you don't have any filing requirements..
If US tax were withheld than you would need to file a 1040NR to recover the withheld tax.
In canada you need to declare your capital gain and you shall be taxed only in Canada.[/quote]
Thank you so much! Just to clarify: I have capital gains from both US stocks and Canadian stocks. Are they all considered "Canadian source income" under the treaty? It seems strange that gains from US stocks would be considered "Canadian sourced". Thanks again!
Two related links for you :
https://www.irs.gov/individuals/interna ... overnments
https://www.irs.gov/individuals/interna ... me-concept
Put a hold on my last interpretation .. I thought that your F-1 visa was overriding the 183 days presence test which now appears to not be the case.
I think that your "tax home" if you intended or if you have been more than 1 year in the USA as a foreign student has shifted towards the USA.
Therefore, given this new information I would tend to say that your capital gains are us-sourced and would need to be declared on a 1040NR on the NEC schedule at a flat 30% rate.
Then on your canadian return you will claim a Foreign tax credit for your US-Capital gains.
Form T2209 : Line 431 (foreign taxes paid) Line 433 : Your US capital gain (in CAD currency) divided by 2 (only 50% of your gains are reported as taxable income on line 127)
Sorry for the misinterpretation.. I'm giving you this information to the best of my knowledge hopefully this can give you help but don't take my advice for cash, just trying to help.
But make sure to thoroughly read the two links I've given you.
https://www.irs.gov/individuals/interna ... overnments
https://www.irs.gov/individuals/interna ... me-concept
Put a hold on my last interpretation .. I thought that your F-1 visa was overriding the 183 days presence test which now appears to not be the case.
I think that your "tax home" if you intended or if you have been more than 1 year in the USA as a foreign student has shifted towards the USA.
Therefore, given this new information I would tend to say that your capital gains are us-sourced and would need to be declared on a 1040NR on the NEC schedule at a flat 30% rate.
Then on your canadian return you will claim a Foreign tax credit for your US-Capital gains.
Form T2209 : Line 431 (foreign taxes paid) Line 433 : Your US capital gain (in CAD currency) divided by 2 (only 50% of your gains are reported as taxable income on line 127)
Sorry for the misinterpretation.. I'm giving you this information to the best of my knowledge hopefully this can give you help but don't take my advice for cash, just trying to help.
But make sure to thoroughly read the two links I've given you.
[quote="nelsona"]The treaty overrides these IRS instructions. If he is cdn and is filing a 1040Nr and thus a residential cdn return his cap gains are exempt from us tax[/quote]
Hi nelsona, thank you for your answer! Can you please refer me to the items in the treaty where this is discussed? It seems to me that Article XIII Paragraph 4 suggests exactly what you said. Is that right?
Hi nelsona, thank you for your answer! Can you please refer me to the items in the treaty where this is discussed? It seems to me that Article XIII Paragraph 4 suggests exactly what you said. Is that right?