treaty benefits for extended visits to the US

rafa02 · Post by **rafa02** » Wed Jun 13, 2012 12:39 am

I have a friend who is Cdn citizen and resident and has property in California and who would like to regularly spend 6 months or more in Cali. I have read a comment by nelsona that one should not attempt to use form 8840 but the Tax Treaty instead. So would he then file a NR US tax return and include 8833 and if so, what article would he use and how long could he actually stay in the US?

2nd question concerns my status. I am dual citizen and Cdn resident and have assumed that I didn't really have to worry about how many days I spend in the US, as I file US return anyway, now I am wondering if I need to make a treaty claim if I could be determined to be a US resident (effectively a dual resident for tax purposes)?

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testone · Post by **testone** » Sun Jun 17, 2012 7:25 pm

No need to worry about your number of days in the US. No treaty filing is necessary for you.

nelsona · Post by **nelsona** » Mon Jun 18, 2012 10:58 am

Our poster diesn't need to worry, but his friend does.

8840 appliaes only to those who stay less than 183 days in calendar year. It is always simpler to follw this rule and file 8840, than to have to file 1040NR and a treaty election, sop I advise not exceeding the 183 days.

rafa02 · Post by **rafa02** » Mon Jun 18, 2012 12:42 pm

My concern for my situation is if I exceeded 182 days in the US, would I be considered a US resident for tax purposes, and what effect would that have on my ability to re-source US bank interest to Canada or to exclude my CPP income from my US return (which I have been excluding using the treaty as per nelsona's advice in a previous post).

nelsona · Post by **nelsona** » Mon Jun 18, 2012 2:15 pm

You need to decide where you live and acta accordingly.

But on the matter of interest and CPP, if you live in US, then you will stop reporting CPP in canada, and as for US bank interest, you are only re-sourcing because you are paying tax in Canada. If you move to US, the need for re-sourcing disapperars: you are no longer taxed in canada.

Your real concern should be provincial healthcare, as you will lose this by moving your tax home to US (which you would by being out of Canada for 183 days a year.

rafa02 · Post by **rafa02** » Mon Jun 18, 2012 3:00 pm

I am planning to remain a Canadian resident. My concern is after researching this topic for my non US friend, that perhaps I could inadvertently fall under this numbers scenario.

If I understand correctly, I can maintain my provincial health care as long as I don't spend more than 182 days away from my province during a calendar year. However the US requires the inclusion of one sixth the days in the US 2 years ago and one third the days from the previous year added to the current year, which can significantly reduce the days allowed in the current year.

nelsona · Post by **nelsona** » Mon Jun 18, 2012 3:09 pm

The SPT does not apply to you, as was pointed out earlier. The determination of whether you are a US tax resident or not is STRICTLY based on the treaty. Nothing else.

So, you need to maintain the rrequired treaty residence in Canada. Given that you will be acitizen of both, and have a home in both, it will come down to number of days per calendar year. Period.

You provincial helthcare will be based on any rolling 365-day period, not simply calendar.

So, bottom line, to be safe you need to always spend 184 days in a stretch in Canada.

rafa02 · Post by **rafa02** » Mon Jun 18, 2012 3:11 pm

Thank you.