TN visa worker Tax 2023 Letter from IRS

[ntake98@gmail.com]

Hi all,

I live in Windsor and work in Michigan. I had filed my taxes for 2023, I had worked in Canada for the 10 months and 2 months in US. I filed a T1 and reported the US income.

I also filed a 1040 NR for US side, I recently received a letter from IRS asking me the following:
Tax Treaty Country; Canada
Tax Treaty Article Number :????
Amount exempted ???

My income was about 9k so in the return I was due a refund; but they asked me how I calculated 0 in tax owed in line 15; not sure how to respond to these questions. Thanks

[nelsona]

Well, since it was only 9K, you are entitled to exempt the entire amount, by treaty, Article XV.2(a). You aren't entitled to any standard deduction.

Other than that, I suppose there were lines on the 1040NR Schedule OI that you did not fill out.

Btw, since you owed no income tax in US, you cannot claim any on your Cdn return as foreign tax credit. You are however allowed to claim the FICA that you paid,

[ntake98@gmail.com]

Hi Nelsona

Thanks for that clarification. I just rechecked I sure did miss a bunch of lines in Schedule OI 1040 NR. I did claim the FICA in my CDN return
Thanks for your help!

[ntake98@gmail.com]

Hi
Thanks for that clarification. I checked and yes, I had missed a bunch of lines in Schedule OI 1040 NR. Other than that I had only claimed the FICA in CDN return.
Thanks for the help I appreciate it!

[ND]

RE: "You are however allowed to claim the FICA that you paid"

Can you pls post the source for that?

[nelsona]

Article II.2(b)(iii) covers FICA

Our poster never said he worked in Canada for a US company: he worked for two months in US and made 9K. Surely no one would work for a year for a US firm and make $9K. Never became a US resident.

I safely assumed he went to work for a US company for 2 months, made 9K, and if it was W-2 income, it would have FICA, whih he could claim in Canada.

As is always the case, if a poster is not being paid correctly (ie. on a CDn payroll for the CDn employment) but does not mention it.....

[ND]

I was afraid you'd say Article II.2(b)(iii). That article refers to required tax. If an American employer pays unrequired tax for a Cdn employee who should instead have been on their, or a PEO outsourced, Cdn payroll system, there is no basis for CRA to allow FTC on T1 for tax that should never have been paid to IRS. Further, that employee exposes employer to Cdn payroll tax penalty and Cdn PE of USCO issues.

[nelsona]

Of course. Legally paid/owed FICA.

However, will IRS really refund the FICA related to his exempted work (ie. work performed in Canada)? I've not heard of that outcome.