Help with taxes for a TN holder with Canadian income

dplist · Post by **dplist** » Sat Mar 25, 2006 11:13 pm

I have read carefully old postings (a real wealth!) on this forum and have almost all my questions answered, but to be on the safe side:

From Jan-Dec 2005 I worked as a research scientist in US (hence I am a resident for tax purposes, as >183 days, right?) for NIH (US government institution).

I was paid by both NIH and Canadian government through a fellowship. (no other income or investments or properties in either countries). My understanding is that I have to file both to US and Canada. US first and then Canada with the amount paid in US taxes claimed as foreign tax credit.

Q1) NIH issued only 1042-S (not W2?) that TurboTax does not accept (or that I could find place for). I entered information (net income and tax withheld) into a W2 section of TurboTax to get an estimate on tax due. Is this a good estimate? (Before asking HR at NIH, I wanted to know what I should get - if I go without a clear request, it will take forever to sort this out).

Q2) The 1042-S that I got says in box 15: Recipient's country of residence for tax purposes: Canada - which suggests non-resident status, but I spent more than 183 days in US?

Q3) To claim my spouse, TT is suggesting that she files 1040NR even though she lived in Canada in '05 and doesn't have either SSN or ITIN.

Many thanks.

nelsona · Post by **nelsona** » Sun Mar 26, 2006 4:51 pm

If you got paid by a 1042, then you can't fake a W2.

dplist · Post by **dplist** » Wed Mar 29, 2006 10:36 pm

Thank you for your reply.

What is your advice:
- to file as NR because of the document
- or ask NIH to issue a different document and file as a resident?

The income is fairly small, hence the difference is just about 1 percent. I just want to do it right and avoid any potential hassle for making a mistake here.

nelsona · Post by **nelsona** » Wed Mar 29, 2006 11:58 pm

What is your immig status?

If it is F or J, you are not US tax resident by IRS rules.

dplist · Post by **dplist** » Thu Mar 30, 2006 12:26 am

I am on a TN and I meet the substantial presence test. I started on feb 01, 2005.

nelsona · Post by **nelsona** » Thu Mar 30, 2006 10:46 am

A 1042-s does not prevent you from filing a 1040 asa resident.

You may not be able to avail yourself of Turbotax, but, this is often the case for first year taxpayers.

There is nothing to change about last years forms. you must include all income on your 1040, from both sources.

You should get NIH to correct your status for THIS YEAR, and this should also mean that you pay SS tax, if you haven't been. IRS will probably want some for last year too.
Let them figure that out.

dplist · Post by **dplist** » Thu Mar 30, 2006 9:43 pm

Oh, thanks, I didn't realize that 1042s doesn't preclude me from filing as a resident.

Got it: TurboTax is not the answer, so I filled out 1040 on paper. Everything's fine, but I cannot find a place for income that's reported on 1042s. Is there a place for it or should I put it under other income?