Canadian on a P-1 in the USA.

[prefy]

Hello All,

I am a Canadian working in the USA on a P-1 visa. Essentially what I am trying to figure out is weather I qualify as a "resident or no resident" for tax purposes.

Obviously the "Green Card Test" does not apply in my situation.

I am wondering how or if the Substantial Presence Test applies to me. This confusions stems from the fact that I had professional assistance last year doing my taxes and the tax professional stated that days on a P-1 are not counted towards the substantial presence test but from everything I have read I have not seen that stated. I would like to get this clarified.

Note: I am not a Professional athlete who is temporarily in the United States to compete in a charitable sports event.

In the event that the substantial presence test does apply to me (I know I will have been present in the USA >183 days) is there anyway that I can still be deemed a non-resident for tax purposes?

I do make my tax home in Canada (I am in Canada for 4 months of the year, have bank accounts, loans etc) and for the purpose of a P-1 visa I cannot cut ties with my country of origin as it is required to maintain P-1 status.

Any help would be greatly appreciated.

[nelsona]

Lots of misinfo.
1. P1 (either P1a or P1b)) status DOES count towards presence
2. P1 status does NOT require maintaining a foreign address, and permits living in US (unlike say, toursist or student status).

Now, if you DO maintain a Cdn residence (you don't have to) then you can side-step the fact that you met SPT by fing an 8833 treaty claim that you live in canada, which you would submit with your 1040NR.

[prefy]

Thanks for the response.

I figured that they were wrong about the P-1 days not counting to the SPT but for the 2011 tax year I was not in the USA for >183 days so I didn't worry about it (Probably should have said something though).

From everything I have read online it states that a worker on a P-1 Visa must seek to enter the US temporarily and are required to have a residence abroad that they don't intend to abandon.

Here is an example:
http://www.immihelp.com/visas/pvisa/

Is there an official source of information on this where I can get clarification?

[nelsona]

I have never seen this applied to P1. you must mere;ly have the intention to depart at the end of your status, not maintain a foreign residence. Besides, from what you say, you aren't maintining a foreeign residence.

I would look on more official sites than immihelp, although they are usually good.

uscis.gov is the only offcial site. Read p status there and it says nothing of foreign residnce that I could see:

http://www.uscis.gov/portal/site/uscis/ ... 7543f6d1a/

[nelsona]

bad url but you get the point.

[nelsona]

now the reality of your "season" might make giving up residency impractical, but that is a decision you will have to weigh.

Otherwise, you will be paying Cdn/prov tax rates on your US income, which may be more than you are paying in US.

but, since P1 does acrue tax presence, and if you meet SPT you canclim US tax residency, even if you maintain a Cdn residence, by ALSO maintaining a US residence, you would escape Cdn tax -- ie be delared a deemed non-resident by treaty.

[prefy]

I did take a look the P-1 information on USCIS and like you mentioned it didn't say anything about foreign residence that's why I was confused about why other sites would say something of the sort. I thought maybe there was another resource out there where it was mentioned.

Personally I am trying to avoid being a tax resident of the US as then I would have to report worldwide income (I did have a small amount in Canada) and I feel this would really complicate my return in the US.

Like you said as I am in the US on a seasonal basis so it does make cutting ties to Canada impractical and likely quite difficult.

[nelsona]

so 1040NR, reporting only US-source incoem, and an 8833 to claim Cdn residency is your way to go. Your US yax and any fica becomes a credit.

Don't forget state taxes were you perform.

[prefy]

Thanks for clearing things up Nelsona - definitely a very good resource.

Now its time to read up on filling out a 8833.

Last year I believe I filed a 1040NREZ so I need to do some reading on the 1040NR and work my way through it.

Thanks again!

[nelsona]

Whichever 1040NR you file doeasn't matter. EZ simply has less lines.

[prefy]

So I have determined that the 1040NR EZ makes the most sense to file with. Doesn't seem to be of any benefit to file the 1040NR. This is a long post so I apologize but I have tried to keep it concise.

I would like to make sure I am taking the right steps in claiming a treaty exemption and filling out the 1040NR EZ properly.

So In filling out Schedule OI Section J

1.(a) Country - Canada
1.(b) Tax Treaty Article - 4
1.(c) Number of months claimed in prior tax years - 0 (I have never claimed this)
1.(d) Amount Exempt income in current tax year - Box 1 from W-2 (Total Wages)
1.(e) This would be the total from 1.(d)

In determining the Tax treaty article I referenced article 4. I did this because of this statement and the following reasoning.

2.(a) He shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both States or in neither State, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);

I do not own/rent a home in Canada but I would consider my "Centre of Vital Interest" Canada. I have always lived in, previously worked in, have loans, bank accounts, credit cards, familly etc in Canada. I my mind this satisfactorily demonstrates that Canada is my "Center of Vital Interests". Correct me if I am wrong.

If this is all correct then the number in 1.(e) would be entered on line 6 of the 1040NR EZ.

I am confused at this point because there is no mention of line 6 then being used anywhere else in the tax return. Line 7 states to add lines 3,4 and 5 (Nothing is entered in these lines) then Line 10 (Adjusted Gross Income) would be 0. This would mean that I would have all the tax refunded to me? Therefore i would not have a foreign tax credit to claim in Canada?

I am also unclear as to what I have to fill out on the 8833 or even if i have too. This is what I have figured out based on my previous information being correct.

I would check the box "The Taxpayer is disclosing a treaty-based return as required by section 6114"

1a Treaty Countries - Canada
1b Article - 4

2,3,4 - I am not sure what I put in any of these fields.

5 - i would assume that I would explain the situation like i did above?

[nelsona]

All the best with that.

[prefy]

Thanks for your help