Working in Canada earning under 10,000

[joeinusa]

My family and I are Canadian citizens that moved to North Carolina in 2001. Each is a Green Card holder. My son Joe Jr. has gone back to Canada to University of Waterloo co-op program.
Joe Jr. work terms in 2005 were in Canada. He earned $9200. Taxes were withheld.
He was in Canada 330+ days in 2005 at university or working. He did apply for and recieved a OHIP card.

Since less than $10,000, might he be able to file as non-resident and retrieve his taxes withheld. What form would he use?

Alternately he would file in Canada to retrieve the withheld tax. In the US, he would then use Form 2555 to exclude this income earned in Canada. But North Carolina would want some tax or so my H&R Tax Cut software says. Should I be able say that taxes were paid to another state (would Canada count in that sense) or is North Carolina tax due period.

My son does come back to NC briefly between terms which will maintain his green card status.

[joeinusa]

In alternate scenario, file in Canada meant as a resident.

[nelsona]

He should simply file as a Cdn and US resident. It is not worth the battle vs. CRA, especially since he applied for OHIP.
With his tuition and eduction credits he will pay nothing in Canada.

He deas have to report the income in US anyways, since I presume he wishes to keep his GC, and that is a condition, and can use whatever credits he needs there to avoid US tax. 2555 would work.

He should pay NC tax, since he lives in canada. The 'student' rules don't really apply, but if by some quirk of NC rules he owes $100, pay it if it keeps him your dependent (i try not to explore state tax issues).

[nelsona]

I meant to say he should NOT have to pay NC tax.

The only issue that may come up is if you claim him as a dependant. If he studied in another state, NC mat have a claim, but I somehow doubt it if he is outside US.