Canadian Citizen working in US

[Noreaster]

Hello, I'm hoping someone might be able to clarify something for me. Here is my situation:

-Canadian Citizen married to US Citizen (2015) with one child (2017) born in Canada
-Lived in Canada with family, working for a Canadian company until July 2017 when I accepted a position at a US firm, moving family to Texas and working on a TN visa. TN Visas are 'temporary' in nature. You are not allowed to show any intent to immigrate.
-Using the Lookback formula, I spent exactly 183.0 days in the USA, so I pass the substantial presence test. Did spend more than 183 days in Canada in 2017 however.
-I own a house in Canada, it is not currently rented (vacant)
-I have multiple Canadian bank accounts, registered and non-registered investment accounts
-I have one vehicle in Canada, one vehicle I drove down and imported to US and one I purchased in US
-Currently renting house in US

I have worked in the US in the past, for a Canadian company, and while I was unmarried and did not own a house in Canada. During that time (2012-2014) I filed as a non-resident alien even when passing the substantial presence test by filing form 8833 (Treaty Based Return Position Disclosure) claiming that my permanent and habitual abode is maintained in Canada and that Canada is the centre of my vital interests through my primary economic activities, my family and the location of my personal belongings. So, I filed my US return and paid tax on my US income and then filed my Canadian return and paid tax on my global income, taking a foreign tax credit.

I spoke to an accountant I know here, she doesn't have a lot of cross border experience but I showed her my old returns and she does not think that I would be able to file that treaty-based position and that I would need to file as a US resident. She feels that the US is now my centre of vital interests, living here with my American spouse and our child while working here for a US company.

From my understanding, the tax treaty between US and Canada ensures that I will only be treated as a resident for tax purposes in one country. In that country, I will be required to pay tax on my global income, and in the other country I will only need to pay tax on the income earned in that country.

Because of the much lower US tax rate and no state income tax, I would love to be considered a resident of US instead of Canada, but from what I understand about getting non-residency status in Canada you basically have to get rid of all your personal property, registered accounts, drivers license, professional organizations etc, and basically make it seem like you never intend to return, which I have no intention of doing, especially considering the temporary nature of my work visa. That being said, I do plan to stay in the US for at least 3 years.

So therein lies the confusion. Can I simply file my Canadian tax return as a non-resident (and only pay taxes on my Canadian income) and then file US taxes as a resident alien (and pay tax on my global income, taking a foreign tax credit for taxes paid in Canada)? I feel like there is no way it can be this simple. Canada is very greedy when it comes to extracting tax dollars from expatriates.

I really appreciate any advice on this matter.

[nelsona]

You are a US resident (because you satisfy the SPT , and you have no justification for claiming closer connection. You are simply like thousands of other Cdns who move to US for work at some point during the year.

The difference for you is that -- married to a US citizen -- you are already allowed to file as resident any time it suits you, so this is definitely one of those years.

So you will filea full year 1040 jointly with your spouse, reporting world income for the entire year, and you will then exclude some or lall of your Cdn wages using form 2555, and take a tax credit for any tax on your other Cdn-source income.

For Canada, you simply file a departure return, using the date you moved to Texas. You are a non-resident because of you and your family being in US. The ties you mention do not outweigh this. If you want to be technical, you are considered a demed non-resident, because although you have a potential residence in Canada, you outweigh these with US ties. CRA never argues with this reasoning.

I will address a TN concern next.

[nelsona]

As you say, TN does not allow immigrant intent. For most, this means not filing for a green card (although one can file for GC while on TN, switching to EAD after 3-4 months -- anotherstory for another website).

However, because you are married to a USC, WHO IS NOW LIVING IN US, you are generally assumed to be intending to immigrate. So, on any border crossing that you might make, you could be asked enough questions about your spouse and her whereabouts (she must cross with her US passport) that *could* get your TN pulled.

In the past, you could travel to US freely on a non-immigrant (TN, visitor, doesn't matter, there are both statuses which do not allow immig intent) because she lived in Canada, so there was no presumption that you were immigrating. Now that she is in US, the reasoning is that it is so much better to have immigrant status than temp status, that you are bound to get a GC at some point in the near future.

So, if you are hoping this job lasts for a long time, you should be either getting an H1-b (which allows for immig intent, but is very difficult to get these days), or quickly filing for GC through your spouse.

[Noreaster]

Hi Nelsona,

Thank you so much for your response. You are a saint!

I contacted my tax accountant in Canada and discussed this with him. Like me, he was a little bit skeptical about being able to become a non-resident of Canada without severing ties as normally required. He said he would look into it internally and get back to me next week.

As for the TN issue, I appreciate your input. When I originally entered the US to get the visa, I had my wife and child with me. I brought quite a few documents showing my numerous ties to Canada and the agent did not question my intentions extensively. I did fly back a week later to drive down with my vehicle and didn't have any issues entering then either. Nevertheless, I have reached out to the immigration attorney my company hired to do my TN visa package to see what they think and inquire about the green card process.

I need to travel back to Canada within the next couple months to take care of tax matters, so unfortunately I don't think I have enough time to start an Adjustment of Status and receive EAD/Advance Parole. I suppose I will have to risk it and if necessary try to back up my story with as much documentation as possible.

Any final thoughts? Thanks again!

[nelsona]

Since your accountant is not a cross-border specialist, you can trust me when I say you are a deemed non-resident while you have the empty house, which is exactly the same as a non-resident tax-wise. One you sell the house or rent it out, then you are a true non-resident, but you will already have departed (last July). If you are thinking of selling, remember that you have a year to sell from time of departure to avoid any Cdn tax on the house.

As to immig intent, of course when you petitioned for TN, you were all still living in Canada (not a requirement for TN btw, unlike B2 visitor). Now, you are all in US, so that evidence no longer exists.

For filing AOS, you need to be in US when you file, AND you need to sty there fpr the 3-4 months until you get EAD/AP. So, find a time when you will stay in US; you may have tp send your spouse back if you have any errands in Canada during that time. You should be fine returning this time if you are by yourself. It is crossing together that could instigate the denial.