Hi,
I am planning to move to Seattle on a TN/L1 Visa while my wife stays in Vancouver. I will be paid by a US company into my US account and will not have any income in Canada. My wife will work in Canada. I plan to stay in the US for over 180 days, which will establish my tax residency there. We currently live in a rental in Canada and will continue to do so.
I would like to understand if I will need to pay taxes in Canada, considering the higher tax rates compared to the US, in the following scenarios:
- If I decide to travel to Vancouver almost every day. Also, will buying a rental property in the US affect this?
- If I come to Vancouver from Friday night to Monday morning, which would add up to over 180 days in the Canada.
Thank you for your assistance.
Determining Tax Residency
Moderator: Mark T Serbinski CA CPA
Re: Determining Tax Residency
Unless you actually stay in US, and have your spouse visit you, instead of you visiting her, you will be remain a CDn tax resident.
The number of days in each country is not really important, but you will never break Cdn tax residency, until your spouse moves to US, or you stop visiting Canada completely.
The number of days in each country is not really important, but you will never break Cdn tax residency, until your spouse moves to US, or you stop visiting Canada completely.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Determining Tax Residency
Thank you for your kind response. Please correct me if my understanding is wrong:
- If I have a spouse living in Canada, I will be considered to have strong ties with Canada for tax residency.
- If I am living 180+ days in the US, I am considered a tax resident of the US.
In this case, I am a resident of both countries, so it will come down to the tiebreaker rules of the US-Canada tax treaty. According to the treaty, if I have a rental property investment in the US and not in Canada, then I will need to pay tax on my US earnings in the US and my Canadian earnings in Canada. In this situation, I won't have to file my US income in Canada as foreign income.
Can you help confirm if that's correct?
- If I have a spouse living in Canada, I will be considered to have strong ties with Canada for tax residency.
- If I am living 180+ days in the US, I am considered a tax resident of the US.
In this case, I am a resident of both countries, so it will come down to the tiebreaker rules of the US-Canada tax treaty. According to the treaty, if I have a rental property investment in the US and not in Canada, then I will need to pay tax on my US earnings in the US and my Canadian earnings in Canada. In this situation, I won't have to file my US income in Canada as foreign income.
Can you help confirm if that's correct?
Re: Determining Tax Residency
Yes, it will come down to tie-breaker rules, however, with your spouse in Canada AND YOU VISITING HER REGULARLY, this tips the centre of vital interest clause significantly towards Canada.
Business dealings, and even a job in US, doesn't override this.
Business dealings, and even a job in US, doesn't override this.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Determining Tax Residency
Thank you, Nelsona, for your response. I somehow missed the notification of your previous reply.
Since the first condition in the tie-breaker rule states that an individual shall be deemed a resident of the Contracting State where they have a permanent home available to them:
If I remove myself from the rental agreement for our apartment in Canada and purchase a home in the US where I reside, would this satisfy the "permanent home" criterion and override the “vital interests” clause?
Thank you again for your insights!
Since the first condition in the tie-breaker rule states that an individual shall be deemed a resident of the Contracting State where they have a permanent home available to them:
If I remove myself from the rental agreement for our apartment in Canada and purchase a home in the US where I reside, would this satisfy the "permanent home" criterion and override the “vital interests” clause?
Thank you again for your insights!
Re: Determining Tax Residency
You would still have a "permanent home AVAILABLE" to you, proven by your constant returns there.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing