Self Employed Canadian with TN1

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rulerruler
Posts: 2
Joined: Mon Jan 04, 2021 3:19 pm

Self Employed Canadian with TN1

Post by rulerruler »

Hi All,

I am in a very similar situation as the post from 4 years ago: viewtopic.php?t=11439.
I am a self employed Canadian citizen working for a US client under TN1. I have mostly been working from Canada but for the past 2 months (less than 183 days) have been working from U.S and hoping to extend the stay a bit while still staying under the 183 days limit (making sure to not pass the substantial presence test).
I have also filled out w8ben for the client so no taxes are withheld. For 2019, I filed Canadian taxes and planning to do the same for 2020 but not 100% sure about filing US taxes.
In the post from 4 years ago, its mentioned that if I don't stay in US for longer than 183 days (fail the substantial presence test), I don't need to file US taxes on the income? Is that correct? Many websites mention filing the 1040NR for non resident aliens, do I need to file that?

Thanks for all the help! Appreciate it very much.
nelsona
Posts: 16655
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Self Employed Canadian with TN1

Post by nelsona »

Be aware that it is not a calendar year that determines the 183-day period, but it is ANY 365-day period, if you are present in US for 183 days, your self-employment income for that period becomes taxable in US. Otherwise, indeed you OWE no US federal tax.

It is wise to file a 1040NR, especially if you are issued a 1099, in order to PROVE that you do not owe taxes. The 1040NR has spaces to provide the reasons and treaty article(s) you are using to avoid the need for PAYING US tax.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
rulerruler
Posts: 2
Joined: Mon Jan 04, 2021 3:19 pm

Re: Self Employed Canadian with TN1

Post by rulerruler »

nelsona wrote:
> Be aware that it is not a calendar year that determines the 183-day period,
> but it is ANY 365-day period, if you are present in US for 183 days, your
> self-employment income for that period becomes taxable in US. Otherwise,
> indeed you OWE no US federal tax.
>
> It is wise to file a 1040NR, especially if you are issued a 1099, in order
> to PROVE that you do not owe taxes. The 1040NR has spaces to provide the
> reasons and treaty article(s) you are using to avoid the need for PAYING US
> tax.

Thanks for the reply! Thanks for the reminder of 183 days in any 365 year period! Is this in reference to the substantial presence test?
According to https://www.irs.gov/individuals/interna ... sence-test ,
that would mean 183 days in a 3 year period right? So the 2 months I stayed in 2020 would be divided by 3 then counted towards the 183 count? Or am I calculating that incorrectly?

I have not been issued a 1099, I can ask my client about it. Thanks for pointing about the 1040NR.

You mentioned no US federal tax, does that mean I might still owe state taxes? And I guess that would depend on state by state basis (Indiana for me)?

Thanks again for your help!
nelsona
Posts: 16655
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Self Employed Canadian with TN1

Post by nelsona »

The 183 per 365 is a treaty defintion, not SPT. it goes along with the definition of permanent establishment.

The states have their own rules on what constitutes taxable work in their state.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
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