TN extended remote work in Canada

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jixca
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Joined: Wed Apr 06, 2016 9:12 am

Re: TN extended remote work in Canada

Post by jixca » Mon Jun 29, 2020 12:03 pm

After spending the weekend reading thru the non-resident return guide, I got a better understanding of the reporting requirements.

Basically, one reports the prorated US-wages to CRA and pay the federal and provincial taxes. The only difference with a resident return is not including other income like interest or capital gains. There's no CRA credit to claim so the sum of taxes to be paid is going to be large and will need to be plan/timed properly with IRS return with form 1116.

I was confused earlier when reading through the guide and assumed my US-wages are foreign, but for my case of exceeding 183 days while keeping non-residency, it's Canadian sourced income (as others, not on the foreign income section) in ufile and turbotax.

Now, I'm assuming I don't need to prepay the CRA taxes by installment right? While the estimate tax for 2020 can be up to 40k and exceeds the 3k limit for ON, I did not file for 2019/2018 and thus has not met both requirements per https://www.canada.ca/en/revenue-agency ... html#fctrs, after all, this is still up in the air and I may not exceed the 183/365 days in the end.

nelsona
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Re: TN extended remote work in Canada

Post by nelsona » Mon Jun 29, 2020 7:32 pm

Thanks for repeating what I told you a few times already.

As to making installments, you can make them if you wish. You may also want to increase your exemptions on your W-4 for the rest of the year, as you will grossly overpay your US taxes if the income "becomes" Cdn-source, eligible for 1116.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

jixca
Posts: 78
Joined: Wed Apr 06, 2016 9:12 am

Re: TN extended remote work in Canada

Post by jixca » Tue Jun 30, 2020 12:32 pm

I try to summarize the conclusion, for my own reference on steps to take next year in filing 2020 taxes, as well as to help anyone in the similar situation :)

I'm keeping track of the days present in Canada, and until I exceed that I probably wont' do anything. Afterwards, I'll have to calculate and possibly consider filing as resident of Canada if the benefits (health coverage, other credit or deductions) may overweight the cost (the hassle of declaring assets in 2020 for arriving/departing, and tracking market value of them)

nelsona
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Re: TN extended remote work in Canada

Post by nelsona » Tue Jun 30, 2020 4:44 pm

Remember, those 183 days accumulate between the first day you returned to canada -- until next year on same date. Sometimes, you can hit the 183 days in the next tax year, and have to back-file a return for the previous year. So be prepared for that.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

FIRELife
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Joined: Thu Sep 03, 2020 12:02 pm

Re: TN extended remote work in Canada

Post by FIRELife » Thu Sep 03, 2020 12:32 pm

This super helpful,

Thank you Nelson and Jixca for posting. @Jixca, I am in the same boat - quarantining in Canada and US employer is fine so I am on US payroll. I plan to stay at least the whole year.

To summarize (Hope I don't annoy you Nelson):

Even if I still more then 183 days, I can still be a non-resident of Canada but need to pay taxes for the time I was here (this is really important to me as I want to take advantage of the cost-basis for Capital Gains when I do officially move back to Canada since that is based on the date I become a resident again).


@Jixca do you want to connect off of this forum as we both go through this super unique and complex process?

nelsona
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Re: TN extended remote work in Canada

Post by nelsona » Fri Sep 04, 2020 7:05 pm

Whether you become resident of Canada depends on residential ties to compared to your US ones, and not days in canada. If you become more tied to Canada than US, you become resident that day, which could be the first day you return to canada. So if you are not wanting o become resident of Canada, you need to keep as many ties in US as paoosible and as little as possible in Canada (whcih would include not getting an appartment or house to live in)
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

jixca
Posts: 78
Joined: Wed Apr 06, 2016 9:12 am

Re: TN extended remote work in Canada

Post by jixca » Sat Sep 05, 2020 12:45 pm

Agree with above.

There is another thread (viewtopic.php?f=2&t=299631) that has some CRA updates which may excluding counting the March-September 2020 period in 183 day calculation, but I think to keep being non-resident while in Canada one still has to avoid many things which will become impractical eventually (health insurance, renting or purchasing home, and also Canadian income if one starts to work locally even just a little) while also keeping all ties in US.

Personally I've paused the clock by leaving, until there's more clearer CRA position on this I'm taking the conservative approach. It's not clear yet if one needs to explicitly report to CRA for 2020 on the Covid waiver/exception or just not file for 2020 as per usual for non-resident with no Canadian income to report.

FIRELife
Posts: 5
Joined: Thu Sep 03, 2020 12:02 pm

Re: TN extended remote work in Canada

Post by FIRELife » Sat Sep 05, 2020 9:17 pm

Thank you both.

That makes sense - I have no ties to Canada other than bank account/credit card (no investments). In the US, I still have an address, all my net worth there (investments, savings), and am still on US payroll.

I am actually totally fine with filing Canadian Taxes in 2020 (it would be nice though to save some $$). What is important to me is to be deemed a non-resident for 2020 because for my US Stock investments, I came back in March and that would be ugly if I want to take advantage of the Cost-Basis for Capital Gains Taxes when moving back to Canada. I actually plan to come back to Canada to be a resident in 2022.

Let me know if you two have any more thoughts on my situation. Appreciate it!

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