Am I eligable for tax return under TN status?
Moderator: Mark T Serbinski CA CPA
Am I eligable for tax return under TN status?
I'll be starting a 3-month contracted internship for a US company under TN status starting next week. During this time I'll be staying in the states for a total of under 90 days. However, the firm has a policy of withholding 25% of my paychek for US federal tax purposes. Seeing as how my tax home is in Canada, am I eligible to claim all of it back? Do I have to submit a US tax return to do so?
You will submit a 1040NR.
If you were considered an employee, you will pay US tax (and should have Fica deducted on paycheck) at the rates determined by 1040Nr.
If you are considered self-employed (doesn't sound like it) then you will report the income, and then exempt it by treaty. There should be no US tax owing.
Depending on the state you are working in, you likely have to file a state return as well.
In anycase, any tax you finally pay (plus any fica) will be considered foreign tax eligible ofr credit on your Cdn return, when you report the income on it.
If you were considered an employee, you will pay US tax (and should have Fica deducted on paycheck) at the rates determined by 1040Nr.
If you are considered self-employed (doesn't sound like it) then you will report the income, and then exempt it by treaty. There should be no US tax owing.
Depending on the state you are working in, you likely have to file a state return as well.
In anycase, any tax you finally pay (plus any fica) will be considered foreign tax eligible ofr credit on your Cdn return, when you report the income on it.
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I neglected to mention -- since typically TNs working for 3 months make more than $10K -- but if your US wages are less than $10K for the calendar year, you can exempt the income when filing the 1040NR. You will still be on the hook for any fica.
Just as a general comment tough, just because your taxhome is in canada, doesn't automatically mean thatincome earned in US isn't taxable in US. All it means is that income earned anywhere will ALSO be taxed in canada.
Just as a general comment tough, just because your taxhome is in canada, doesn't automatically mean thatincome earned in US isn't taxable in US. All it means is that income earned anywhere will ALSO be taxed in canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing