tax difference between OPT and TN

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Park
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tax difference between OPT and TN

Post by Park »

Hi all: I am a Canadian citizen, I just received my Optional Practical Training (OPT) Employment Authorization Card; at the same time my company is also preparing the documents for my TN petition. My question is, which one I should choose, TN or OPT? My concerns include following:
1. Which one can bring me more tax benefit?
2. My wife plans to go back to school, is it true that TD holder can go to school without transferring to F-1 Visa but F-2 holder have to obtain F-1 Visa to study?
Thanks for help!
nelsona
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Post by nelsona »

First, as a student (F status) you are still resident of canada (regardless of your residential ties), so any income you make on OPT should be reported in Canada (and US). This would not neccesarily be the case if you were a TN, provided you had no residential ties in Canada.

Given that you are/were a student, I would think that you have a lot of deductions that would reduce your Cdn taxation to very little, and any US tax you would pay could be used asa credit.

However, if you do go TN, you MUST pay SS and Medicare tax, while on OPT you should not have to have these taxes withheld (check with employer).


So, if you can confirm that you are SS/Medicare exempt, and if you don't mind filing in Canada one more year, then stay F1, otherwise switch to TN.

As to studying under TD, you would need to check with the school. Many states veiw TD as foreign tuition, other do not. What status is she in now?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Park
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Joined: Sat Feb 04, 2006 12:19 am

Post by Park »

Thanks nelsona!
For the first point, you said "as a student (F status) you are still resident of Canada (regardless of your residential ties)". I feel a little bit confused about it because my 2004 Notice Of Assessment told me “We have disallowed your claim for a provincial tax credit since deemed residents and non-residents of Canada are not eligible for this creditâ€￾ and “We have disallowed your federal and Ontario claims for eligible tuition fees.â€￾ Because of these two sentences, I didn't get any deduction for my tuition on 2004. Does this suggest that I'm a non-resident since August 2004? Do I need to send form NR73 to confirm?
We have nothing in Canada except two RRSP accounts and one bank account. My wife is in F-2 status.
Thanks for help!
Mark T Serbinski CA CPA
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Post by Mark T Serbinski CA CPA »

Although you may be considered a non resident of Canada, certain types of income are deemed to be earned in Canada to students, and are therefore taxable in Canada. This includes any funding you receive from Canadian sources for your studies.

Money you earn in the U.S. while studying there is not includable on your Canadian return while living in the U.S.
Mark
nelsona
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Post by nelsona »

If CRA has determined that you are not a resident of canada, then so be it.

Although technicallay, since you are on a status that does not permit you to be a tax resident of US, this would by definition mean that you have not left canada.
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 »

Money you earn in the U.S. while studying there is not includable on your Canadian return while living in the U.S.
This applies in this particular case, since CRA has said our poster is non-resident.

If however, the student were a CDN resident, all income from all sources would be taxable in canada. His Cdn-source income would not be taxable in US.

And the vast majority of Cdn students in uS ARE considered Cdn tax residents.

I would be intersted on how CRA came to the non-res determinaition in this case; perhaps our poster had gone down to uS in some other status first.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Park
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Joined: Sat Feb 04, 2006 12:19 am

Post by Park »

Thanks for all replies and information!

I also feel surprised that I was considered as non-Canadian resident in 2004 because I worked in Canada for the first seven months and then left for my graduate study in U.S. in July 2004. I entered U.S. in F-1 status and haven’t received any CDN-source income since I entered U.S. My whole family went to U.S. with me and I own no properties in Canada except two RRSP and one bank account.

Thanks for help!
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