Substantial Presence Test for withholding

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babingley
Posts: 5
Joined: Mon Jan 30, 2023 9:06 pm

Substantial Presence Test for withholding

Post by babingley »

Hello all,
Trying to wrap my head around this and will keep this as succinct as possible.

I moved from Canada to the US at the beginning of December, 2022, to start a new job in the US on a H-1B visa. I plan on remaining in the US permanently and will soon be on the green card track. (Possibly relevant: My partner is a US citizen, and we will marry this summer.) I will be in the US for 350+ days this year.

For the current tax withholding on my paycheck, should I be considered a resident tax alien? Or nonresident? I will satisfy the SPT for the purposes of taxation for 2022 when I file in 2023. Right now I am seeing a high amount of taxes being withheld on my paycheck, far above what any tax calculator determines.
babingley
Posts: 5
Joined: Mon Jan 30, 2023 9:06 pm

Re: Substantial Presence Test for withholding

Post by babingley »

I see, from Publication 15-T, that an additional $1154.20 is withheld from non-resident aliens every month. Is this correct? If so, considering I plan on remaining in the US, what are my options? Thank you.
xatham
Posts: 13
Joined: Sun Jul 03, 2016 11:24 pm

Re: Substantial Presence Test for withholding

Post by xatham »

If you and your spouse are physically present in the USA for 350 days a year, it would be hard to argue that the US-Canada tax treaty tiebreaker rule does not give you the status of US tax resident for the year of 2023. You should have tax withheld as though you were a tax resident of the US (since that is what you are).

For 2022 you might want to file as a dual-status alien. You could file as a resident alien for the whole year, but that would mean you would owe taxes on your World (Canadian) income on your US tax return for the entirety of 2022, so you'd have to figure out if that's worthwhile for you.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Substantial Presence Test for withholding

Post by nelsona »

Withholding is NOT the final result tax.

File your W-4 as a resident.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
babingley
Posts: 5
Joined: Mon Jan 30, 2023 9:06 pm

Re: Substantial Presence Test for withholding

Post by babingley »

Thank you, nelsona and xatham.
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