form 8840 - closer connection and tax home

[sanfranman]

I have lived and worked in the US for 180 days in 2009 (under TN-1). all of my 2009 income came from this period in 2009. Therefore, i understand that i am eligible for the closer connection exemption (even though i do meet SPT becuase of stay in the US in previous years) and can submit form 8840.

however, my question is under my circumstances, is Canada my tax home for 2009 given that all of my income came from the US and that my employment location where i earned that income was in the US for those 180 days? ( i did however maintain close connection to Canada by means of family, posessions, social ties etc. and my work stay in the US was only 1 year in total over 2008/2009)

so i am wondering if i even stand a chance of receiving the closer connection exempetion or whether i should just try filing 8833 form?

thank you

[nelsona]

There are two separate issueshere. One your tax residency, and the second, how to file in US.

Since it is clear that you never left canada, then you should continue to file world income in Canada as if you worked in Toronto.

How you file in US is really a matter of choice: your goal should be to lower your US tax to a level that you can use it all up on your Cdn return as foreiegn tax credit.

Usually, filing 1040NR (which is what you are proposing to do)does not yield the lowest US tax rate. A 1040 reporting world income, and excluding Cdn wages usually does, especially considering tyou said you had no Cdn earnings in 2009. You may not need to file 1040 if your Cdn tax rate is high enough.

But is is quite simple to file 1040NR (probably with no 8840, and no 8833) by simply filling in the correct information on the 1040NR to indicate why you are non-resident by treaty (even if you meet SPT).