Residency Inquiry + Taxes

mmadany · Post by **mmadany** » Tue Jun 30, 2015 4:34 pm

Hi,

I have researched this form quite a bit and learned a lot but still am confused about a couple of issues.

Here's my situation:
- Own the corporation out of Alberta, Canada
- Work in the US under a TN Visa
- Would be exceeding the 183 days substantial presence test in the US
- Belongings in Alberta: House and rental unit, Vehicle, spouse and dependent spend most of their time in Alberta

Q. Do the days spent in US before obtaining the TN Visa count towards the 183 days?

Q. Do I have to file taxes in the US either for Personal or Business?

Thank you so much for your help!

Maddy

nelsona · Post by **nelsona** » Tue Jun 30, 2015 4:53 pm

For Cdns in your situation, the number of days spent in US only go towards determining if/how you report yoyr income in US, not so much towards residency.

To be considered a resident of canafa, even if you spent 365 days in US, you would need to show that your ties in canada outweigh your US ties, From what you describe, you are probably still Cdn resident, by treaty.

So, if you wish, you may still file as a Cdn resident. You would file a 1040NR and make a treaty declaration that you are still Cdn resident. You would also avail yourself of the XXV(2) trearty provison to file 1040NR at the preferencial rate.

You would have to file personal US taxes because your TN income is earned in US. Unless you are runninga business (you didn't say if your TN was as an employee or corp-to-corp) you don't need to file US buiness taxes.

mmadany · Post by **mmadany** » Tue Jun 30, 2015 5:08 pm

Hi Nelsona,

Thank you so much for the detailed reply.

My Canadian business gets paid from the US company in USD. They do not pay me personally.

Would the 1040NR form still apply for me in that case?

Thanks a lot for your help.

nelsona · Post by **nelsona** » Wed Jul 01, 2015 9:01 am

You would still file 1040NR, to report any US-sourced income to prove that you are not resident (if you look at 1040NR, it has a whole section in which you describe your presence in US). As I said, you would also need to attach a 8833 treaty claim for non-residency.

Does your Cdn comapny pay you? Since it proably doesm, then that income should be reported on a 1040NR. By being in US so long, you have made your business income taxable in US.

You would also file a corporate tax return.

mmadany · Post by **mmadany** » Wed Jul 01, 2015 3:31 pm

OK this is starting to make some more sense now.

So int he interest of complicating things (sorry), I should mention the following:

- Any income earned up until end of June was from a Canadian corp to my Canadian corp. Work during that period was performed partly in Canada and partly in US

- Any income earned from July onwards is from a US corp to my Canadian corp. Work during that period was also performed partly in Canada and partly in US

My Canadian corp will eventually pay me but has not yet this year. I understand now that this income I will be reporting on the 1040NR.

I understand that by exceeding the 183 days I need to file corporate tax return, but what if some of those days I was just in the US on B1 and not TN (so I was just in the states for meetings). Can I count only the days spent here under TN status?

Also, which income is taxable in US vs CAN? US sources in US and Canadian sources in CAN?

Thanks again for all your efforts. Really appreciate it.

nelsona · Post by **nelsona** » Wed Jul 01, 2015 3:42 pm

That will be for your accountant to decide.