Tax Residency for Canadian F-1 Student in US

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ohhhmydeardog
Posts: 6
Joined: Fri Apr 16, 2021 12:12 pm

Tax Residency for Canadian F-1 Student in US

Post by ohhhmydeardog »

Hi all,

I'm a Canadian citizen who started studying in the US on an F-1 visa in Aug 2016.

In 2018, I started working in WA with an F-1 OPT visa. When I filed my Canadian taxes for 2018, I cut ties and paid deposition on some stocks I had in my Canadian investment account.

In 2020, I sold those stocks mentioned above and also stocks in my TFSA account and closed all the account.

I'm preparing my 2020 tax right now, and, according to my F-1 status, I'm still a non-resident in the US since it hasn't been 5 calendar years since I started my F-1 Visa. This means, if I understood correctly, I do not need to report my foreign bank accounts and capital gains. However, since I've also cut ties with Canada earlier, I'm unsure how I would pay taxes on the stocks I sold in my Canadian investment accounts and TFSA in 2020.

Am I a tax resident in neither country or am I deeply in trouble here?

Thanks
nelsona
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Location: Nowhere, man

Re: Tax Residency for Canadian F-1 Student in US

Post by nelsona »

You are still working on OPT?

Yeah, by no longer filing a Cdn tax return, you are not eligible to claim that your gains are protected by the treaty, so you must report the gains (both inside and outside TFSA) and pay 30% non-resident tax. Only Cdn residents get to avoid US taxes on gains. Interest however is not taxable to non-residents.

You probably should not have declared Cdn non-residency, because, by Cdn rules, you can't beak residency until you establish it elsewhere. If canada accepted it, so be it. But now you face the problem of not being able to claim trreaty benefits reserved for Cdn residents.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
ohhhmydeardog
Posts: 6
Joined: Fri Apr 16, 2021 12:12 pm

Re: Tax Residency for Canadian F-1 Student in US

Post by ohhhmydeardog »

nelsona, thanks for the reply.

Yes I'm still working on my F-1 OPT although I'm transferring to H-1B soon.

As you said, I need to report my gains both inside and outside of my TFSA account. I'm assuming you mean report it to the IRS here right and not the CRA?

The CPA I'm talking with doesn't seem to really know this and claimed that, since I'm still on F-1, the IRS does not care about the gains in my foreign account. Thanks for the heads up and I'll look into this a bit more.
ohhhmydeardog
Posts: 6
Joined: Fri Apr 16, 2021 12:12 pm

Re: Tax Residency for Canadian F-1 Student in US

Post by ohhhmydeardog »

Also, if you don't mind helping with one more question. Should I continue to file 1040NR for 2020 as I was still on F-1 OPT, or does the fact that Canada considers me a non-resident forces me to be considered a resident in the US.

Thanks.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Re: Tax Residency for Canadian F-1 Student in US

Post by nelsona »

Sorry, the capital gains would be paid on US-SOURCED capital gains, so you are off the hook on that. If they were US-sourced, you would have to pay because you are no longer Cdn resident and can;t rely on the treaty to source them to canada.

I would keep filing 1040NR. It is canada that has goofed by letting you leave.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
ohhhmydeardog
Posts: 6
Joined: Fri Apr 16, 2021 12:12 pm

Re: Tax Residency for Canadian F-1 Student in US

Post by ohhhmydeardog »

nelsona , thanks for the follow up.

I'll continue to talk to my CPA about filing a 1040NR this year. Although I'm not sure what I should be putting on Schedule OI Line B "In what country did you claim residence for tax purposes during the tax year?"
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Re: Tax Residency for Canadian F-1 Student in US

Post by nelsona »

Yeah, that is the problem, but you've answered that incorrectly last year, too.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
ohhhmydeardog
Posts: 6
Joined: Fri Apr 16, 2021 12:12 pm

Re: Tax Residency for Canadian F-1 Student in US

Post by ohhhmydeardog »

hah ya I've somehow put myself in a really screwed situation. I'm debating whether I should talk to a cross-border accountant and try to fix some of these and and interests/penalty if any but not sure if that just calls for even more trouble upon myself.

Thank you so much for your answers really, appreciate the helps.
nelsona
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Re: Tax Residency for Canadian F-1 Student in US

Post by nelsona »

You are allowed, by treaty, to file a Full US 1040, as a Cdn "national". under the non-discrimination clause. That is usually better than filing 1040NR if ones income is mostly US based, Then you pay normal US tax on your income and can use the standard deduction etc.

That is wht I would do if I was countryless like you,
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
ohhhmydeardog
Posts: 6
Joined: Fri Apr 16, 2021 12:12 pm

Re: Tax Residency for Canadian F-1 Student in US

Post by ohhhmydeardog »

btw I got paranoid and called the CRA to verify I'm indeed a non-resident on their record.

Thanks again for all the tips nelsona!
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