US Tax Treaty Tiebreakers

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Nato1486
Posts: 2
Joined: Fri Mar 22, 2019 12:45 pm

US Tax Treaty Tiebreakers

Post by Nato1486 » Fri Mar 22, 2019 12:50 pm

I am trying to determine my Canadian tax residency status and if I need to file Canadian taxes. See below for facts of my situation:

-I am a US citizen and my wife and daughter are dual US/Canadian citizens
-I have lived in the US my entire life; my wife and daughter recently moved from the US to Canada (August 2018); we have a permanent residence in Canada
-I also have a permanent residence in the US and my job/income is in the US; I live in the US during the week and return to Canada as a visitor ~3 weekends per month (on an annualized basis, I would be in the US more than half the time); credit cards/bank accounts/investments/drivers license/health insurance all US

My conclusion:
-I have significant residential ties with Canada because I have a residence, a spouse and a dependent there, so I am considered a tax resident of both Canada and the US
-Because of the tax treaty, I need to go through the list of tiebreakers:
1- property; I have a permanent residence in both countries, so this is a wash
2- center of vital interests; spouse and daughter in Canada; job/income in US; credit cards/bank accounts/investments in US; to me this one is a wash (but is the areaopen for debate)
3- habitual abode; I spend most of my time in the US; if my wife/daughter were traveling, I would stay in US and not Canada
4- citizenship; I’m a US citizen
-Based on the tiebreakers, I believe I would be considered a US resident for tax purposes and wouldn’t need to file Canadian taxes; my wife would file Canadian taxes and note that I am a non-resident (we don’t qualify for any benefit payments)

I am looking for advice on my conclusion to see if I am correct or not. Thanks for any responses!

nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: US Tax Treaty Tiebreakers

Post by nelsona » Sun Mar 24, 2019 1:16 pm

You are a "deemed non-resident" which is treated exactly like a non-resident. Until you spend more time in Canada, and your family spends less time in US (or anywhere else outside Canada), you do not meet the treaty definition of a Cdn resident.

The rule of thumb on split families like yours is : when you visit together, do you do it in US, or in Canada? That is your centre of vital interests.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

Nato1486
Posts: 2
Joined: Fri Mar 22, 2019 12:45 pm

Re: US Tax Treaty Tiebreakers

Post by Nato1486 » Sun Mar 24, 2019 1:49 pm

Thanks, nelsona. Just to clarify the second part of your response. My wife and daughter have been living full time in Canada since August 2018. They visit me in the US from time to time, but most of our time together is in the form of me visiting Canada on the weekends. Does that change anything?

After further research, the center of vital interests is composed of personal and economic ties. My personal ties are more closely aligned to Canada and my economic ties are more close aligned to the US. It doesn’t appear that one receives a higher weight that the other, which would make that a tie (and then move to habitual abode tiebreaker, which I believe would be in the US favor).

Thanks again for the helpful responses.

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: US Tax Treaty Tiebreakers

Post by nelsona » Mon Mar 25, 2019 10:15 am

I gave you my answer.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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