More favorable to be resident or nonresident alien for taxes

josephmango · Post by **josephmango** » Tue Jul 10, 2012 11:34 am

This is a fantastic site, thank you!

I am a Canadian who will be working in the USA under TN status. I understand that if I were to stay 183 days or more this year, I would become a resident alien for tax purposes in the USA. Since I arrived in early July, I would just barely reach this number if I were to stay in the USA for the rest of 2012. Would it be better when I file my 2012 taxes to do so as a resident alien, or should I try to take a few days of vacations outside the USA so that I stay as a non-resident alien for taxes? I was not sure which tax status might be more favorable if you have any suggestions please since I may be able to tailor my days in the USA appropriately this year.

Thank you very much!

nelsona · Post by **nelsona** » Tue Jul 10, 2012 11:58 am

"days in US" is merely one criteria for US tax residency. it is NOT the one Cdns going down to work on TN use to become US tax residents. days simply do not matter.

Cdn simply use the treaty definition of resident, which is essentiallly "live and work in US".

In the year you change from non to resident, you are almost always better off to elect (a treaty benefit), to file full year 1040, reporting all world income. Unlike canada non-resdeint taxation in US is usually MORE than resident taxation.

So, for CANADA, you will leave in July. Period. File a departure return on that basis.

For US, file a full year 1040, and use 2555 to exempt your Cdn wages and/or 1116 to get credit for your Cdn taxes.