TN status, taxes and ObamaCare

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snnybrr
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Joined: Sun Nov 06, 2016 8:41 am

TN status, taxes and ObamaCare

Post by snnybrr »

Hello everyone,

I recently moved to the US and started working here on TN status as of January 3rd. I ask this question now regarding my 2017 taxes (for next year) due to ObamaCare implications.

1. When I file next year, do I file 1040NR or the regular 1040? I am a Canadian citizen with substantial residential ties to Canada and am only renting a place here.

2. Do ObamaCare/penalties have anything to do with this seeing that I'm a Canadian on TN status? Again, I ask now to determine whether I need to get insurance as my employer does not cover it.

Please advise. Thank you!


Sunny
nelsona
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Post by nelsona »

Your continuous presence in US might overwhelms your Cdn residential ties.

What "substantial" ties do you have in canada? You can only have one home and one spouse.

You do have a home in US and are living and working there. That sounds substantial too?

If you are considered a US tax resident, then you will have to either get coverage or pay the penalty.
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snnybrr
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Joined: Sun Nov 06, 2016 8:41 am

Post by snnybrr »

[quote="nelsona"]Your continuous presence in US might overwhelms your Cdn residential ties.

What "substantial" ties do you have in canada? You can only have one home and one spouse.

You do have a home in US and are living and working there. That sounds substantial too?

If you are considered a US tax resident, then you will have to either get coverage or pay the penalty.[/quote]

nelsona,

I was going under the assumption that a TN status is obtainined with the condition that you maintain residential ties with Canada. I have a house in Canada and am only in the US for work. However, now it appears that this is different for tax purposes.

Are there any exemptions for ObamaCare, or does everyone need to have it? Also, when I file for taxes in the US, I must also attach my foreign tax info on my Canadian filing, correct?


Sunny
nelsona
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Post by nelsona »

Having a foreign residence has NEVER been a condition of TN (unlike, say, visitor status).

Since you will be non-resident of Canada from the day you left, there should not be anything to report form US on your final Cdn tax return, so, no, you don't attach any US information.

The only residence-related exceptions to obamacare are for americans working abroad, not foreigners working and residing in US.

talk to your co-workers and find out who they are getting coverage with.
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snnybrr
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Post by snnybrr »

Noted re: health insurance...

Wouldn't I be considered a "factual resident" of Canada as per http://www.cra-arc.gc.ca/tx/nnrsdnts/nd ... y-eng.html?

I'm only in the US temporarily (on TN).
nelsona
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Post by nelsona »

Did you read on:

If you have established ties in a country that Canada has a tax treaty with and you are considered to be a resident of that country, but you are otherwise a factual resident of Canada, meaning you maintain significant residential ties with Canada, you may be considered a deemed non-resident of Canada for tax purposes.

You become a deemed non-resident of Canada when your ties with the other country become such that, under the tax treaty that Canada has with the other country, you would be considered a resident of that other country. As a deemed non-resident, the same rules apply to you as a non-resident of Canada.

by working and living in US, even though you have ties in Canada, you have the same ties in US, and are by IRS considered a US resident, and by treaty as well.

TN is a temporary IMMIGRATION status, but it is not exempt from US residency tests (unlike a student or exchange visitor).

That is why I asked you what your ties in Canada are vs. what your ties in US are. That is what decides your residency, not your TN.
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nelsona
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Post by nelsona »

But, let's be pragmatic for a moment.

You live and work in US. Your excessive time outside your province disqualifies you from provincial health coverage even if you somehow maintain tax residency. And, if you somehow keep prov health coverage, it doesn't really protect you in US.
And you get the privilege of paying higher taxes in Canada on your US income.

So, you really need heath coverage, just like your co-workers, so why not simply get coverage rather than pay the fine?
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snnybrr
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Post by snnybrr »

Thanks, nelsona, this clarifies it significantly.

I will be applying for health coverage.

Regarding taxation, seeing that I pay property tax in Canada and have, for example, a Canadian driver's licence, am I not required to file taxes in Canada at all? Am I not supposed to report my foreign (US) income?
snnybrr
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Joined: Sun Nov 06, 2016 8:41 am

Post by snnybrr »

To add, I have the following in Canada:
- a house
- a car
- regular chequing account, credit cards
- TFSA and RRSP

Will I be filing the 1040NR or 1040? In addition, do I need to file Canadian taxes and report foreign (US) income?
nelsona
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Post by nelsona »

You will file a departure return in Canada based on the date you left to begin working.
You are deemed non-resident after that, and will not have to fiel a Cdn tax return until you move back to Canada.
In US, you will file a 1040 for 2017.
Your state requires all drivers who live and work in that t state to get a steate DL, usually within 30 days. So, your Cdn DL is about done, as is your Prov health care.
You should be closing your TFSA, as it is not sheltered in US, and can be a reporting nightmare in US. You can re-start it when you move back.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
snnybrr
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Post by snnybrr »

What if I intend to move back at the end of my 1-year contract that ends Jan 2018? Do same rules apply then?
nelsona
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Post by nelsona »

When/If you move back, you will be a newcomer to Canada.

I've seen too many say they were only going for a short period, and thus pooh-poohed the idea of accepting non-residency, only to stay and have to redo their returns.

In my opinion, anyone who goes to US on TN, H1-B, L1 is a departing Cdn, even if he has a home in Canada, unless (a) he commutes daily/weekly and/or stays in hotels while in US.

Btw, your departure date is likely dec 31 2016, so you can get the departure tax return done this spring.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Post by nelsona »

When/If you move back, you will be a newcomer to Canada.

I've seen too many say they were only going for a short period, and thus pooh-poohed the idea of accepting non-residency, only to stay and have to redo their returns.

In my opinion, anyone who goes to US on TN, H1-B, L1 is a departing Cdn, even if he has a home in Canada, unless (a) he commutes daily/weekly and/or stays in hotels while in US.

Btw, your departure date is likely dec 31 2016, so you can get the departure tax return done this spring.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
snnybrr
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Post by snnybrr »

Yes, my departure date was in fact December 14th. I did not report this to the CRA via any applicable form, or to Service Ontario for OHIP. Was that required?
nelsona
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Post by nelsona »

First, you should be looking at CRA website for information on "Emigrants".

The only need to report to CRA is that date when you file your 2016 departure return.
You would only need to contact Service Canada to stop any GST/CCTB payments.
You should contact OHIP to tell then you are now longer living in Ontario. had you contacted them before moving, you could request that they keep your account alive for upto 2 years. You could try and see if they would still let you do this -- but don't rely on OHIP coverage while in US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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