Need some advice on how much headache to exceed 183 days

rick_serban · Post by **rick_serban** » Fri Apr 22, 2011 9:21 am

Hi all,

I must admit that I am a bit overwhelmed. I am a Canadian citizen about to work in the US temporarily. As of right now, my contract is for 6 months (so I would exceed the 183 day magic number). My question is: would I save myself a massive headache by making my contract for 5 months instead? My concern is the complexity of the tax filing in the US. I assume in both cases, tax treaties should have me not getting double taxed.

A little more background: I will be entering the US on a TN visa and visiting a University (as a visiting professor).

Thanks a lot!

Rick

nelsona · Post by **nelsona** » Fri Apr 22, 2011 9:54 am

The 183 day mark really doesn't matter between US and Canada because of the treaty.

If you keep your residence in canada (which should not be dififcult), you will not have to be considered US resident. If you come back in 6 months, Canada will not consider you non-resident anywys, so you will have to report your US income in canada anyways.

So, don't worry about length of contract, especially if you are going to be an employee (which you will have to report in US anyways).

rick_serban · Post by **rick_serban** » Fri Apr 22, 2011 10:14 am

Hi nelsona, thank your for your quick response!

Here is the passage that worries me (from form 8840). The last two I will be able to do no problem, but if I stay the six months, I will violate the first and end up being residents of both countries for tax purposes and that sounds like a tax nightmare. You mentioned that me maintaining my residence in Canada (which I will, since this is a temporary, one time only appointment in the US) will allow me to be non-resident in the US. Could you let me know what I'm missing?

passage from form 8840:

Even though you would otherwise meet
the substantial presence test, you will
not be treated as a U.S. resident for
2010 if:
â€¢ You were present in the United States
for fewer than 183 days during 2010,
â€¢ You establish that during 2010, you
had a tax home in a foreign country, and
â€¢ You establish that during 2010, you
had a closer connection to one foreign
country in which you had a tax home
than to the United States, unless you
had a closer connection to two foreign
countries.

Thanks a lot!
Rick

nelsona · Post by **nelsona** » Fri Apr 22, 2011 10:17 am

You won't use 8840, you will use the treaty.

Are you going to be an employee or a contractor?

rick_serban · Post by **rick_serban** » Fri Apr 22, 2011 10:25 am

I will be a visiting assistant professor in the US (so I suspect that means I'll be an employee), so they will be withholding tax from my paychecks, which I know I should be able to claim against my Canadian tax return (which I will report world income). My only issue is what I have to file with the US government. I'm worried that I'll need to fill out a full US tax return and report my world earnings there as well. I know that, even in that case, I shouldn't end up being double taxed, but the headache may not be worth it.

nelsona · Post by **nelsona** » Fri Apr 22, 2011 12:26 pm

You will file a 1040NR by treaty, reporting only your salary, plus a state return if applicable.

The fianl tax, and FICA will be used as a credit on your Cdn return.

rick_serban · Post by **rick_serban** » Fri Apr 22, 2011 12:43 pm

HI Nelson, thank your very much for your responses! You are definitely putting my mind at ease knowing that I may only have to file 1 document with the US federal government. Hopefully Pennsylvania is equally kind and doesn't make me do too much.

Take care,

Rick

dakota · Post by **dakota** » Mon May 09, 2011 11:34 am

Is it best to be a non-resident of Canada for tax purposes if working in the U.S. for an undefined period of time (hoping it to be forever)?

nelsona · Post by **nelsona** » Mon May 09, 2011 9:32 pm