I am a canadian citizen.
Lived and worked in Canada first 5 month of this year.
Since June I am working on TN visa in US as an employee on W2
My family and house are in Canada
I live in US, renting appartment, but visiting my family in Canada quite often, aprox 4-5 days every two weeks.
My employer pays me per diem on weekly basis.
So how should I approach the filing of the taxes.
Should I file US tax first and then Canadian, showing the Canadian income from the begining of the year and also US income and to claim paid US tax as a credit ?
Can I claim more expenses, like airfare in addition to per diem while filing US tax in order to decrease the US income.
I would really appreciate if I can get any tips.
Double taxation question
Moderator: Mark T Serbinski CA CPA
Because you still live in canada, you will continue to report all income in Canada.
For US, your only interst is to file a return such taht you use up all your US rtax as foreign credit on your Cdn tax return, so there is no need to be overly aggressive in finding US deductions.
The usual method of figuring this out is
1. Figure your Cdn tax, using all income and all deductions available to you, as figuring out how much foreign tax could you get credit for based on your Cdn return and the US income you report.
2. Filling a 1040NR, reporting only US income, figuring the tax, and using this, the sate income tax you calculate, and your FICA, on your US return.
3. If this yeilds more US tax than you can use, only then would I start looking at filling out a 1040, joint, and looking for greater deductions. This would be a full-year joint return reporting all world income, and taking all deductions and credits you can (except for foreign tax credit) and only be used to get a final tax RATE, which you would then reapply to your 1040NR. This is known as a non-discrimination return based on article XXV of the treaty.
You proably can use the airline expense (only on your US return), but I get the feeling you won't need it.
For US, your only interst is to file a return such taht you use up all your US rtax as foreign credit on your Cdn tax return, so there is no need to be overly aggressive in finding US deductions.
The usual method of figuring this out is
1. Figure your Cdn tax, using all income and all deductions available to you, as figuring out how much foreign tax could you get credit for based on your Cdn return and the US income you report.
2. Filling a 1040NR, reporting only US income, figuring the tax, and using this, the sate income tax you calculate, and your FICA, on your US return.
3. If this yeilds more US tax than you can use, only then would I start looking at filling out a 1040, joint, and looking for greater deductions. This would be a full-year joint return reporting all world income, and taking all deductions and credits you can (except for foreign tax credit) and only be used to get a final tax RATE, which you would then reapply to your 1040NR. This is known as a non-discrimination return based on article XXV of the treaty.
You proably can use the airline expense (only on your US return), but I get the feeling you won't need it.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Nelsona,
Thank you very much for so fast and detailed reply.
So in general the income tax being deducted from my US income will be used as a foreign tax credit for my Canadian tax return, and only if this amount is above the allowed limit then I need to try to reduce to get some US tax return.
Does it make any difference if I am considered the local resident for some matters, for example I have a local driver's licence and my car is registered in US ?
Does it make any difference if I spend more time in US, than in Canada ?
Again, Thank you very much. I really appreciate your help.
Thank you very much for so fast and detailed reply.
So in general the income tax being deducted from my US income will be used as a foreign tax credit for my Canadian tax return, and only if this amount is above the allowed limit then I need to try to reduce to get some US tax return.
Does it make any difference if I am considered the local resident for some matters, for example I have a local driver's licence and my car is registered in US ?
Does it make any difference if I spend more time in US, than in Canada ?
Again, Thank you very much. I really appreciate your help.
Note that I said the tax CALCULATED can be used as a credit, not the ammount withheld.
You said you went back to canada a lot in 2007, so you stall had a choice of how to file. In 2008, if you spend more than 183 days in US, you will have to file a true 1040, likely joint.
But unless your family moves to US with you, or you stop visiting there, you will continue to file your taxes in Canada as well.
You said you went back to canada a lot in 2007, so you stall had a choice of how to file. In 2008, if you spend more than 183 days in US, you will have to file a true 1040, likely joint.
But unless your family moves to US with you, or you stop visiting there, you will continue to file your taxes in Canada as well.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best