Canadian deemed non-resident on F1 in USA

[canadian_tax_help]

Hi there,

I'm a Canadian citizen. I moved to the US in 2018 for graduate school. I am in the US on an F-1 visa, so my days are exempt from the substantial presence test, and so I am a non-resident. However, on June 30, 2019 I was deemed a non-resident of Canada by the CRA, because my closer connections are to the US. I don't have many possessions, am unmarried and have no kids, so insofar as I have a closer connection anywhere, they're to the US (I have an apartment lease here, health insurance, and a driver's licence).

I have been working in the US on OPT since August 2019.

My questions follow:
- Do I need to declare to the IRS that I am a resident of the US as I am no longer a resident of Canada. If so, how?
- I have not paid social security payroll taxes on my wages, as someone on an F-1 is exempt. Do I need to repay those social security taxes then for the time I was employed in the US, and if so, how?

[nelsona]

No, you are not obliged to declare yourself resident of US, since you are still F1, and have not yet run out the 5-year exemption.

You are essentially been declared non-resident of both countries, one by treaty, and one by regulation.

I'm curious how you were "determined" to be a non-resident of Canada (don't use "deemed" unless you are a "deemed non-resident" there is a difference).

Did CRA decide this on it's own, or had you filed an NR73? Because if you had files an NR-73 and noted that you were not resident of US, then they should have classified you resident of Canada. Remember, closer ties don't apply until you FIRST meet the definition of resident in the other state, which you still do not.

But for your question: For IRS, you are in the clear. It may be CRA that you should worry about.

[canadian_tax_help]

I filed an NR73 to figure out which province I should be filing taxes in (I grew up in BC, but was residing in Ontario when I went to grad school, but have been using my parent's address for bank / CRA, etc. correspondence for want of anything else to put down). In my correspondence to the CRA, I made it clear I am not a resident of the US, but upon review of my NR73 they determined I was an emigrant ("deemed non-resident").

My related concern is on subsequent filings and declarations. The NR1040 has a line asking "in what country did you claim residence for tax purposes during the tax year". Should I leave that blank, or put some other detail in?

[nelsona]

I see your point. However, there is a difference between paying taxes and paying FICA. You are paying your taxes on the 1040NR. You could CHOOSE to file a 1040 (you can anytime even if not living in US), but you still would not have to pay FICA.

I would keep filing 1040NR, and claim Canada as your residence. Just so you know, a "deemed non-resident" is by definition a resident of canada AND another country, so you are fine claiming that you are Cdn resident, and also fine abiding by the Cdn rules for "deemed non-resident", which are identical to non-resident in terms of filing etc in Canada.

Personally, I would be filing 1040NR until my F1 exemption runs out, or I take on another US status.

[canadian_tax_help]

Great thanks. One final question: can I still file a W8BEN in my situation and invest in US stuff without non-resident withholding?

[nelsona]

Yes.

[nelsona]

As I said, you are stil la Cdn resident for tax purposes, but CRA (not IRS) has decided that you are also (but more) a US resident.
As long as you abide by the filing requirements of a deemed non-resident (which still means, departure return for 2019, with june departure date, and reporting Cdn source income and/or paying Cdn NR tax when supposed to), you are good to go with 1040NR