Do I need to file closer connection form?

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sheri
Posts: 15
Joined: Thu Jun 10, 2010 9:53 am

Do I need to file closer connection form?

Post by sheri »

Hello,
I am an IT consultant who lives in Toronto and works in the USA 4 days of the week. The company I work for is a US registered company and they pay my company in Canada for services rendered under "corp to corp" agreement (I work under a TN work visa as a systems analyst).

I also own an investment property in Miami.

In 2013, I worked in the USA for more than 183 days. It is my understanding that since I live in Canada and pay all taxes in Canada, I can still file US taxes as a non-resident alien as long as I file the Closer Connection form. Can you please confirm this?

Also, under what circumstances will the closer connection exemption not be accepted?

Thank you
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Incorrect. The closer connection form can only be used if you do NOT exceed 183 days in one year, but otherwise meet the Substantial presence test.

What you can and should do, is file a 1040NR and make a treaty claim that you are CDn resident. The back pages of 1040NR have spaces for just such a claim. This will allow you to only have to report US-source income

In either case, because you exceeded the the 183 day limit, you cannot avoid US tax on the income eraned wheile in US, even corp-to-corp. This is a change that occurred in the last treaty update. sso you will need to report your US earnings on that 1040NR, along with your FL investment property earnings.

You will report these on your Cdn return too, and take credit for the US tax you paid.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
sheri
Posts: 15
Joined: Thu Jun 10, 2010 9:53 am

Post by sheri »

Thank you for your reply! I actually made a mistake. I was present in the US for 166 days for 2013 and the total for the three years exceed 183 days so I meet the substantial presence test. Therefore can I file a 1040NR and file a closer connection form and not report US income because in 2013 I was there for fewer than 183 days?

Many thanks in advance for the clarification!
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Yes, from what you now say you can file closer connection and form 1040NR.

But you still need need to look at any 365 day period, not Calendar year to see if the US earned income is excludable or not.

Your rental unit is still reportable on a 1040NR. That you have no choice on even f you never set foot in US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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