Canadian working in US on student visa

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potatochips
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Joined: Sat Feb 03, 2018 10:39 pm

Canadian working in US on student visa

Post by potatochips »

Hello,

I graduated from a US college in June 2017, briefly returned to Canada, re-entered the US, and worked in the US for the rest of the year using my student visa. That is, I effectively resided in the US throughout 2017, but I am an exempt individual for purposes of the SPT and thus am a non-resident alien according to the IRS. All of my income is US-sourced.

My questions:
1. Is there any way I can be a deemed non-resident of Canada? The CRA says that "everyone must be resident somewhere". Can I make the argument that I was a US resident because of the length of time I stayed in the US (and that I have barely any residential/social ties to Canada) despite not being a tax resident, or will they defer to the IRS's definition of "resident"?

2. If the answer to question 1 is "no", can I elect to file as a resident alien in the US so that I become a deemed non-resident of Canada? Some other post here mentioned that Canadians have a right via tax treaty to file Form 1040 regardless of the SPT, and I just wanted to confirm that it means what I think it means.

Thanks!
nelsona
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Post by nelsona »

Until you meet an IRS definition of US tax resident, you can’t use the treaty residency tie-breakers to break Cdn residency

As to filing a 1040 instead of 1040NR you can but this will not break Cdn residency. The only reason then to elect to do this would be for a better tax rate, which may not be the result, and is unlikely to save you overall, given you still file in Canada

When you change status in US to a working one (TN, H1- b) or exceed the time limit for which you can be considered exempt, then you will be US resident, Cdn non-resident.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
potatochips
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Joined: Sat Feb 03, 2018 10:39 pm

Post by potatochips »

Thank you nelsona. For (unrelated) reference, where in the tax treaty does it say that Canadians have a right to file 1040 regardless of US tax residency? I couldn't find it...

Asking because the 1040 allows for more itemized deductions than the 1040NR, which actually makes a difference for me because my Cdn taxes turned out to be lower than US taxes due to accumulated credit.
nelsona
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Post by nelsona »

Article XXV. It says in essence that a Cdn national cannot be treated worse (differently) than a US citizen in the same circumstances.

If you file 1040 remember that you must abide by all 1040 requirements, including reporting WORLD income (1040NR does not).

the advantage of 1040 for deduction is more for the standard deduction (and being able to file joint) . Itemizing on either should be about the same. Which things are you thinking are available to itemize on 1040 that you can't on 1040NR
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
potatochips
Posts: 4
Joined: Sat Feb 03, 2018 10:39 pm

Post by potatochips »

The closest things I see in Article XXV to what you're describing are the first two clauses. Clause 1 says that Cdn citizens who are US residents cannot be treated worse than a US citizen, and clause 2 says that Cdn citizens who are US non-residents cannot be treated worse than a non-Cdn citizen who is a US non-resident. Unless I'm missing something, nowhere does it say that a Cdn citizen who is a US non-resident cannot be treated worse than a US citizen.

Assuming that I indeed missed something, if I choose to file 1040, do I also need to file FBAR for my Canadian bank accounts, TFSAs, etc.?

I want to itemize real estate taxes on the 1040, which doesn't seem to be possible on the 1040NR.
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You have not quite read paragraph 1 correctly. It states that Cdns cannot be taxed more by IRS than US citizens in the same circumstances. So just as USC in US can file a 1040, so can a CDn.

In any event, that has long been the practice -- IF it is to your advantage.

BUT, Yes, you would be subject to TFSA taxation, as well as some foreign reporting requirements.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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