Canadian TN commuting to US - how to file next year?

rg1495 · Post by **rg1495** » Mon Feb 19, 2007 5:10 pm

How do you notify the IRS that you are filing 1040 NR but using Article XXV(4) ? I have been filing simple 1040NR for the last 5 years......wouldn't the IRS smell something fishy when I do it the other way this year......I could possibly save atleast 3 to 4K in taxes this year.......does it make sense to go back and amend the taxes for those years? How old is this Article XXV

nelsona · Post by **nelsona** » Mon Feb 19, 2007 7:10 pm

The treaty clause has been around for at least 20 years. You would notify them on form 8833

I think you can only go back 3 or 4 years.

Remember though that any redcution in US tax will be taken by Canada, so you wil have to ammend these returns as well.

rg1495 · Post by **rg1495** » Tue Feb 20, 2007 2:29 pm

if I amend my canadian taxes, can I go back and invest in RRSP's for those years? If not, whatever I save on US taxes, I will end up paying to Canada. So, is there any real advantage in amending the taxes for previous years?

nelsona · Post by **nelsona** » Tue Feb 20, 2007 2:35 pm

You will not be able to make retroactive RRSP contributions, of course. Some make the contributions but don't claim the deduction. These could be claimed.

In your case, the only advantage is that your taxes would be going to Canada instead of US.

Lot of paperwork just for that privilege.

Just learn to do better...

rg1495 · Post by **rg1495** » Sun Feb 25, 2007 12:24 pm

Thanks Nelsona...this is the link to form 8833
http://www.irs.gov/pub/irs-pdf/f8833.pdf

This form requires a US address.....As a canadian resident, how do I give a US address?....I am a canadian citizen and commute to work on H1....u think I can still use this treaty?

thanks

telly1 · Post by **telly1** » Sun Feb 25, 2007 12:44 pm

nelsona, if my husband's eff. tax rate is actually lower using the NR can I file his NR using that tax rate (15.1%) (i.e. a regular NR) instead of the eff. tax rate determined from the pro forma (15.26%) but use the pro forma eff. tax rate for my NR? In other words, can I claim the treaty and my husband not even though we use the 1040 MFJ to determine my eff. tax rate?

nelsona · Post by **nelsona** » Sat Mar 03, 2007 11:01 pm

I don't understand your question.

telly1 · Post by **telly1** » Wed Mar 07, 2007 7:53 pm

Sorry nelsona.
What I meant was, using the pro-forma 1040 (MFJ) I arrived at an effective tax rate of 15.26%. When I calculated our individual tax rates using the 1040NR method, I got 17.3% for me and 15.1% for my husband.
It seems it's more beneficial to use the pro forma method (w/ treaty exemption) for me but just simply use the regular 1040NR for my husband. Is it ok to do this?

nelsona · Post by **nelsona** » Thu Mar 08, 2007 7:29 am

Yu are each filing your own 1040NR. You are simply using the treaty provision to calculate your tax rate, and he is not.

telly1 · Post by **telly1** » Thu Mar 08, 2007 8:41 am

Thanks nelsona. I just wanted to make sure it's "ok" to do that.

rg1495 · Post by **rg1495** » Thu Mar 08, 2007 12:25 pm

Nelsona.......I asked this question earlier but never got a reply.......

Is this the form we have to use for the treaty?
http://www.irs.gov/pub/irs-pdf/f8833.pdf

This form requires a US address.....As a canadian resident, how do I give a US address?....I am a canadian citizen and commute to work on H1....u think I can still use this treaty?

thanks for all your help.

nelsona · Post by **nelsona** » Thu Mar 08, 2007 12:35 pm

Simply for adding it to this post, I'll let you come to your own conclusion.

NO PIGGYBACKING PLEASE.

rg1495 · Post by **rg1495** » Thu Mar 08, 2007 12:38 pm

I am sorry but I don't understand what you mean Nelsona. Form 8833 requires a US address, can I still use it to take advantage of Article XXV?

nelsona · Post by **nelsona** » Thu Mar 08, 2007 1:11 pm

Sigh.

The form does NOT require a US address. It has a space for both a foreign and US one.

Pick one.

telly1 · Post by **telly1** » Wed Apr 04, 2007 11:30 am

nelsona,

I am using the pro forma 1040 MFJ method (I hadn't had a chance to finish this up until now) to calculate the eff. tax rate and use that on the NR. Previously I had come up with a eff. tax rate of 15.26% but I realized that I hadn't entered any information for foreign taxes paid in Canada on my husband's Canadian income (my husband had income both in US and Canada). I'm using TurboTax but am a little confused. What I did was enter the amount of tax paid in Canada (including CPP & EI?) in the foreign taxes paid section as a credit (simplified foreign tax credit election) using "general limitation income". The problem is, this section asks me for his foreign income but I have already entered this information in the income section (wages and salary).

Can you direct me to where I am going wrong? I'd really appreciate it!