Dual Residency Issue for Performing Artist

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taxcanus
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Joined: Sun Feb 21, 2021 3:10 am

Dual Residency Issue for Performing Artist

Post by taxcanus »

Due to COVID-19, I ended up spending more than 183 days in the U.S. in 2020 on an Artist O-1 visa. However, I’m still considered a factual resident in Canada for tax purposes having a permanent home there, family ties, driver’s license, organization affiliations, centre of professional life, etc.

Now I’m very confused about my U.S. tax status for 2020. According to the “Permanent Establishment” rule for single individual services, it would seem that my PE is now the U.S., but this is not entirely clear, since my business - an individual, sole proprietorship - is run entirely online and was established in Canada. I received worldwide income via Paypal through virtual streaming.


Should I …

A) File a 1040 U.S. return with a Schedule C for my business income/expenses and then claim a foreign tax credit on my Canadian T1? (I understand this would imply that I’m ending my business operations in Canada and shifting the ‘establishment’ to the U.S.)

B) File a 1040 with a 1116 Foreign Tax Credit, and do a standard Canadian T1 with full Statement of Business and Professional Activities (as I’ve done in the past)?

C) File a 1040-NR together with 8833 tax treaty “tiebreaker”, and do a standard Canadian T1 with full Statement of Business and Professional Activities?
nelsona
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Re: Dual Residency Issue for Performing Artist

Post by nelsona »

You are still a CDn residdent and a US non-resident, and should continue to file a 1040NR, reporting only US-sourced income. There is spce on the 1040NR to explain your tax residency.

The income you earned while in US will need to be reported on the 1040NR because of your days in US. You will need to report the Self-employment income (you will not have to pay the extra self-employment tax however, because you reside in canada and pay CPP.
You may need to pay state income tax too.

You can then use any tax arising on those returns as a foreign tax credit on your CDn return.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
taxcanus
Posts: 3
Joined: Sun Feb 21, 2021 3:10 am

Re: Dual Residency Issue for Performing Artist

Post by taxcanus »

Thanks so much for the reply Nelsona. This site offers straightforward details on how to make the treaty election: https://hodgen.com/how-to-make-a-treaty ... nresident/

Are there any other forms I will have to supply aside from the 1040NR and 8833 for this situation- like the Form TD F 90-22.1 and Form 8938?
nelsona
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Re: Dual Residency Issue for Performing Artist

Post by nelsona »

You do not need those other forms as they are for tax residents.
In my opinion, you do nit need 8833 either, since the 1040NR has all the spaces 8833 has, including treaty article etc.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
nelsona
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Re: Dual Residency Issue for Performing Artist

Post by nelsona »

Schedule OI. It used to be part of 1040NR, now it is an attachment.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
federovsb
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Joined: Thu Feb 25, 2021 2:04 am

Re: Dual Residency Issue for Performing Artist

Post by federovsb »

I have a similar situation:
I'm a Canadian who entered the U.S. in early March 2020 on an O-1 and stayed for the rest of the year, maintaining Canadian ties throughout 2020 as a factual resident (home, centre of vital interests, etc.).

However, I filed for Adjustment of Status on August 12, 2020 and got my EAD-AP on January 6, 2021. Once the pandemic subsides, I'll return to Canada to sell my home and move all possessions to the U.S. I understand I'll be a resident alien for the 2021 tax year, but what 2020?

Can I also use the tie-breaker rule of the treaty and file a 1040-NR for 2020?
nelsona
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Re: Dual Residency Issue for Performing Artist

Post by nelsona »

You are still Cdn resident and must file a full return there.

You can choose how you want to file in US.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
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