New J-1 employer not respecting tax residency treaty

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Postdoc_scientist
Posts: 1
Joined: Thu Sep 02, 2021 11:23 am

New J-1 employer not respecting tax residency treaty

Post by Postdoc_scientist »

I have been in the US with an F-1 visa (2016-2018) and J1 visa (2018-current). I have passed the substantial presence test, but invoked the treaty to remain a resident for tax purposes in Canada because of substantial ties in Canada (personal belongings at my mom's address/my permanent address, drivers licence/car, TFSA and investment accounts). I filed 1040NR in the US and have had 14% withheld from my student stipend. I have recently graduated my PhD and started a postdoc position. I planned to stay a nonresident of the US at least until the new year when I would evaluate things for my best interest. However, my employer informed me that they do not follow the treaty because they are a private company and are taxing me like a US resident.
1) Is my employer allowed to do this?
2) Am I now a US resident for tax purposes because they decided to tax me that way?
3) If 1 and 2 are true, how can I avoid getting into trouble if Canada audits me and determines I should be a resident for tax purposes in Canada?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: New J-1 employer not respecting tax residency treaty

Post by nelsona »

J'a are never exempt from US tax on US employment. They are only exempt from SS and medicare for 5 years. You should have been filing a non-resident return in US, and a full return in Canada (if you are still considered resident there).

From what you say, you are NOT a Cdn tax resident. Your ties are minimal.

Your current employer is correct.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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