First US Filing - Need 2nd opinion

[baronfhb]

In May 2012, I was promoted within my company. This meant that I was to relocate from Canada to the US. As part of the relocation, I obtained an L1 visa in June. However, I continued to live in Canada and was paid by the Canadian branch until a replacement for my old job was found 1 month ago(Yes, I did both jobs for the last 10 months). For 2012, I was in the US for a total of 92 days and was not in the US at all in the prior 2 years. I maintained my permanent resident in Canada (I will be moving this summer) and lived in hotels while in the US. While in the US, I spent most of the time at our corporate head office but did visit sites in other states. All my pay for 2012, was paid in Canada in Canadian funds.

The tax consultant provided by my company has just informed me that I have to file for US taxes and that I am expected to pay approx. $20K by the 15th (due to the fact that no taxes were withheld in 2012 since I was not paid in the US in 2012). This is mostly made up of federal taxes but also includes taxes for 2 of the 3 states that I visited (my head office is in a income tax exempt state). I have also been asked to obtain a W-2 however my company will not issue one as no payments were made to me. All my salary for 2012 has been reported on my T4.

Does this make sense? Do I have to pay US taxes eventhough my entire salary was paid out of the Canadian office?

Also, looking at the US tax rate vs income table, I'm being asked to pay US taxes on most of my earnings for 2012. Shouldn't this be prorated if I do have to pay taxes?

I understand that any taxes paid to the US can be claimed as a credit on my Canadian taxes. However, looking at the tax forms, I see that I must provide a copy of my W-2 stating the amounts made and taxes paid in the US. If I don't have this (since I was not paid in the US) can I still claim any taxes that are paid? My concern is that if I can't that I may end up being double taxed.

I have asked these questions of the consultant but have been told that he is the expert and knows what he is doing.

[JGCA]

Sounds like you are still a resident of Canada and you would file a 1040NR claiming closer connection to Canada and take a treaty position that you pay all your tax to Canada not the US. Why are you filing in the US when the Canadian Branch sent you to the US to work and they paid you and you had less than 183 days this is clearly a treaty based return with closer connection to Canada. The only reason why I would even file a treaty based reeturn is to protect you from a future assessment in case they decide to tax you its a protective filing.

[nelsona]

Third opinion: I agree with JG. You were basically on a field trip in US, not working for US firm.

You might be liable for state tax, but that would be credited on your Cdn return.

[baronfhb]

Thank you for your replies. This does confirm my concerns with what I'm being told.