Canaidan citizen, resident in US for part of the year -- Seeking advice for tax filing

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grrrrraham
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Joined: Sat Aug 25, 2018 10:14 pm

Canaidan citizen, resident in US for part of the year -- Seeking advice for tax filing

Post by grrrrraham »

Hi there, I'm a Canadian citizen and moved to the US in August 2018 for a short-term work contract on TN Visa. I will be moving back to Canada in Dec 2018. I earned income in Canada from Jan 2018-Jul 2018 and then earned income in US from Aug 2018 and will continue to do so until Dec 2018.

I'm not clear on how I should be filing my taxes and hoping someone can point me to some documentation to read that may help me understand the tax implications of my situation. I am not having any US tax withheld and would like to know how much I should be keeping aside.

As I understand it now, I will file both US and Canada tax returns and will claim my US income on the Canada return. Not too sure about the US side or if my assumtion is even correct to begin with.

Thank you!
nelsona
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Re: Canaidan citizen, resident in US for part of the year -- Seeking advice for tax filing

Post by nelsona »

Since your time in US was so short, it would be difficult to claim that you "moved" to US (you haven't met IRS definition of resident -- not enough time), so you simply file as if you lived in Canada the whole time, and merely visited US to work. Are you a contractor or employee while in US?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
grrrrraham
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Joined: Sat Aug 25, 2018 10:14 pm

Re: Canaidan citizen, resident in US for part of the year -- Seeking advice for tax filing

Post by grrrrraham »

Thanks for your response. I'm a contractor but I am not independent, I am contracted through an agency to work at another company. I think technically I am an employee of the contracting agency (Hourly wages)?

I've been doing some research and it does seem as though I'm still a Canadian resident for purposes of filing taxes for 2018 as you mentioned. Do I just file my US-based income on my Canada return under line 104?

And correct me if I'm wrong but for the US-side for IRS I just need to file a 1040NR and claim *only* my US-sourced income for the 4 months I was here and put all of my income as exempt on line 22 (exempt by a treaty). I can claim over $10,000 due to my short-term stay based on this exerpt from pub 901:

>Income that residents of Canada receive for personal services performed as employees (de­ pendent personal services) in the United States is exempt from U.S. tax if it is not more than $10,000 for the year. If the income is more than $10,000 for the year, it is exempt only if:
>>The residents are present in the United States for no more than 183 days in any 12­month period beginning or ending in the tax year, and
>>The income is not paid by, or on behalf of, a U.S. resident, and is not borne by a per­ manent establishment in the United States.
nelsona
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Re: Canaidan citizen, resident in US for part of the year -- Seeking advice for tax filing

Post by nelsona »

Almost correct.

You cannot exclude the income if it was greater than US$10K, since you were employed -- from what you say -- by the US contracting agency. The unlimited exemption for wages over $10K would apply if, say, your worked for a Cdn firm that sent you to US for the 4 months.

So you will report the wages only on 1040NR, and determine the tax. Same for your state where you were employed. Then you take the IRS and state taxes you calculated, along with any SS and Medicare tax you paid, and use this as a credit on your Cdn return.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
grrrrraham
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Joined: Sat Aug 25, 2018 10:14 pm

Re: Canaidan citizen, resident in US for part of the year -- Seeking advice for tax filing

Post by grrrrraham »

Can you help clarify the second condition for exemption? It is stated as "[If] the income is not paid by, or on behalf of, a U.S. resident, and is not borne by a per­manent establishment in the United States".

I'm pretty sure my income is no borne by a permanent establishment in the US given I am moving back to Canada after 4 months. And, I don't believe a corporation (my employer) is considered a U.S. Resident? Or perhaps it is?

Thanks again for the excellent info.
nelsona
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Re: Canaidan citizen, resident in US for part of the year -- Seeking advice for tax filing

Post by nelsona »

Well, as I said, that is the question: Who paid you while you were in US? Were you 'sent' to US by a Cdn, or were you 'brought in' buy a US one? Was this a US contracting company or a Cdn one? You should know this from your pay stub.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
grrrrraham
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Joined: Sat Aug 25, 2018 10:14 pm

Re: Canaidan citizen, resident in US for part of the year -- Seeking advice for tax filing

Post by grrrrraham »

Ah OK.. yes it's a US entity. I think I just interpreted "US Resident" as an individual, not a corporation.
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