Located in the US but working for a Canadian corporation?

rbartl · Post by **rbartl** » Tue Feb 14, 2017 10:21 pm

Hello,

I'm a Canadian citizen living in Dallas temporarily (Sept 2016 - June 2017). I'm in possession of a TN (work) visa but my employer is a Canadian corporation who pay my salary in Canadian Dollars to a Canadian bank account. I remain a Canadian resident and continue to pay taxes to the Canadian Revenue Agency. My employer relocated me in Dallas to work on a contract they have with an American client.

Given the length of my stay in the United States, I'd been advised by colleagues to investigate my tax situation here.

I found that the IRS may consider someone a US resident for tax purposes even if that person remains a resident of another country. I found something called the Substantial Presence Test (https://www.irs.gov/individuals/interna ... sence-test) which I do not meet for the year 2016 (but which I will likely meet for the year 2017). I also found something called Conditions for a Closer Connection to a Foreign Country (https://www.irs.gov/individuals/interna ... gn-country) which I believe that I do meet.

Am I correct i my understanding that I do not need to file anything with the IRS for 2016 because I do not meet the substantial presence test or can anyone point me to something that I'm overlooking?

Thank you,
Richard

nelsona · Post by **nelsona** » Wed Feb 15, 2017 10:30 am

If you remain in US for more than 183 days in any tax year, you may be subject to US tax on your income. Do you still live in Canada?

rbartl · Post by **rbartl** » Wed Feb 22, 2017 11:30 pm

Hi,

I was in the US for 154 days in 2016, I assume this on its own means that I am not subject to US tax on my income?

While my primary residence is in Canada, I do live, albeit temporarily, in the US.

Thanks,
Richard

nelsona · Post by **nelsona** » Thu Feb 23, 2017 7:29 am

So while you remain a Cdn tax resident, you may be liable for US tax on your wages, because you will be there for a time in which you exceed 185 day in a 365-day period.
Ask your employer to check that they have or have not created a permanent establishment solely because of this.

rbartl · Post by **rbartl** » Sat Feb 25, 2017 3:06 pm

Hello,

Measuring my time in the US using any 365-day period instead of calendar years or the SPT, I'll reach the 185-day mark in early April of this year. Does that mean I need to file with the IRS for 2016 even though I did not meet the SPT for that year?

While I do not meet the SPT for 2016, I will meet it for 2017.

I assumed that meant I would not need to file with the IRS for 2016 but that I would need to file with them for 2017.

Thanks,
Richard

nelsona · Post by **nelsona** » Sat Feb 25, 2017 3:34 pm

Yes, but you could use the closer connection form 8840 to avoid taxation on your world income, and simply file a 1040NR. But you would still have to repot and pay tax on the wages that came from being in US in BOTH YEARS. It is a quirk brought in by the treaty. Since you know that you should consider filing your 1040NR for wages in 2016, now, rather than having to do it retroactively.