Question about non resident US tax filing

kdhillon · Post by **kdhillon** » Fri Mar 11, 2016 11:38 am

Hello,

I was hoping to get some advice on filing my 2015 US Tax filings, and was referred to this forum by a friend.

I was relocated to Charlotte, NC from Toronto in 2013 with my current employer at the time. From Sep 2013 to Dec 2013 I remained on Canadian payroll and commuted to the US for several weeks over that period. Starting Jan 2014 I switched to US payroll and worked full time in the US, coming home to Toronto on the weekends. Throughout I still maintained a residence in Toronto, with my wife staying still staying and working in Toronto. I then moved back to Toronto on April 4th 2015, and switched back to Canadian payroll at that time.

My 2014 tax filing was prepared on my behalf by the corporate accounting firm (KPMG). In it, they used my personal ties to the Canada to deem me as a Canadian resident for tax purposes. My 2014 US return included a 1040NR with an 8833, SC1040, FinCEN 114 and 3520.

For 2015, I would again deem myself as a Canadian resident. I understand I would need to file a 1040NR and SC1040, but was trying to understand whether the FinCEN and 3520 would be required. Any advice would be welcomed. I will be seeking a professional accountant to help with the filing, but would like to better understand what would be needed for my own knowledge.

Thanks!

nelsona · Post by **nelsona** » Fri Mar 11, 2016 12:36 pm

What possible ties would you have in Canada that would outweigh living and working in US?!?

Sounds like they did you taxes wrong for 2014.

kdhillon · Post by **kdhillon** » Fri Mar 11, 2016 1:23 pm

My understanding is I filed as a non resident alien, as I was considered a resident of both the US and Canada and under the tie-breaker rule claimed the following:
- I was on a temporary work assignment in the US
- During the term I remained a resident of Canada
- I maintained permanent home, economic interest, personal interests and habitual abode in Canada

The return they prepared is fairly lengthy, with a number of statements included citing different sections/articles of the treaty. I'm hoping my 2015 return would be simpler as I am on my own to prepare it.

I believe I would again be considered a non-resident alien, and would file the 8833 with my 1040NR. I'm unclear on the requirements for the FinCEN and Foreign Trust reporting (3520) that would be required.

nelsona · Post by **nelsona** » Fri Mar 11, 2016 2:11 pm

Sorry, I guess I missed the part about returning home.

You can continue to file the way they did. Of course, you will only report the US wages on the 1040NR.

Not sure what an "SC1040" (sooth Carolina tax?) is. Nor why you would need to file 3520 if your were not filing 1040. You are not a US citizen, or green card holder, and were not filing as a resident. No harm, I guess.

Do you know if this resulted in all US tax being used as a credit on your Cdn return?

because, in your situation, you would have been better off from a US tax point of view to file a 1040NR, but with the tax rate determined on a joint 1040. It is called a XXV(2) return. it is designed for couples where one works in US but remains a Cdn resident (like you).
This usually yields lower US tax, if this is needed to get you below your Cdn tax rate.

Otherwise, I guess you can keep filing the way you are.

Sorry again for my confusion.

kdhillon · Post by **kdhillon** » Fri Mar 11, 2016 2:55 pm

The SC1040 was for state filing for South Carolina (where I was working). They did use all my US tax paid as a credit on my CDN return.

Yea, I didn't think I needed the 3520 last year, and will probably not file it this year if not required.

Is FinCEN required? I suppose to real issue if I had to file, just one less thing for me to do (and such a pain to figure out max value of each account since I've been transferring funds around throughout the year).

nelsona · Post by **nelsona** » Fri Mar 11, 2016 4:49 pm

Technically the treaty position that allows you to file 1040NR even though you meet residency rules, does NOT extend to all other obligations of US residents, so 3520 and FinCEN should probably still be filed.

the real question was why you had to file 3520. What accounts did they say it was for? And if 3520 was required, why wasn't FTCA and PFIC filings made.

kdhillon · Post by **kdhillon** » Fri Mar 11, 2016 5:29 pm

The 3520 was for my TFSA accounts, with any gains deemed taxable in the US.

nelsona · Post by **nelsona** » Sat Mar 12, 2016 9:56 am

.. .and did TFSA have muual funds, These fall under PFIC rules.

nirvana_1959 · Post by **nirvana_1959** » Fri Mar 18, 2016 11:53 am

[quote="nelsona"]Technically the treaty position that allows you to file 1040NR even though you meet residency rules, does NOT extend to all other obligations of US residents, so 3520 and FinCEN should probably still be filed..[/quote]

Quick question... What benefit does one get from taking the treaty position to be treated as NRA (I thought one reason was to shield the non-US assets - RRSP, RESP, TFSA - and income from US IRS) ?

nelsona · Post by **nelsona** » Fri Mar 18, 2016 5:34 pm

It is purely for INCOME tax. You would not have to report any Cdn income, including say, a $500K gain on your home.

nirvana_1959 · Post by **nirvana_1959** » Fri Mar 18, 2016 6:20 pm

Thanks Nelson. Dhillon's filing of 3520 (for TFSA), FinCen along with 1040NR and treaty based NRA position threw me off.

kdhillon · Post by **kdhillon** » Thu Mar 31, 2016 10:03 pm

Hi Nelson ... Just to follow up. I went through my travel logs and calculated that for my 2015 filling I was only present 168 days over 3 year (using the 1, 1/3, 1/6 rule). In that case I should only need to file a 1040NR and the state SC1040 since I don't need to use the treat position. Both of which I can base exclusively on my W2.

nelsona · Post by **nelsona** » Fri Apr 01, 2016 10:26 am

Correct
Even if you DID meet SPT using the three year rule, you would not need an 8833 to file 1040NR, you would use 8840 instead.