Location: Western Hemisphere
Posted on: 03-04-11 18:41:15
Is it possible to get into a situation where you could be treated as a tax resident of two countries?
For example, I have all sorts of ties to Canada, hence naturally a tax resident of Canada. However, I am working and living in New York state. The US tax forms state if I am living for more than certain days, it would make me a tax resident of US.
If that is the case, I also become a tax resident of US. I am also reading material that says one cannot be a tax resident of 2 countries if the 2 countries have a treaty. However, I also read somewhere where it says the accountants consider it perfectly ok to be treated as tax residents of 2 countries despite the treaty.
Any thoughts? Thanks.
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Dimple2001
My uncle was working as an engineer in New York state. As I understand it he had to pay American income tax and then pay to the Canadian government the difference between what he paid in the U.S. and what his tax would have been here. This was about 10 years ago so it may have changed.
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Yes, I think it is possible to be treated as a tax resident of two countries. For example, if you are working on a TN visa in the USA and you reside in the US for most of the year, you will probably be considered a resident alien for tax purposes by the IRS. However, it might be tricky for you to claim non-resident status in Canada, as that might imply that you have an intent to seek residence in the USA, and therefore that you possess immigration intent. As TN is a non-immigrant visa class, you are not allowed to demonstrate immigration intent without violating your visa status.
Similarly, if you are an F-1 student in the USA, you are considered a resident alien for tax purposes after your first five years in that visa class (so say if you do a PhD after BSc, or you are doing a long PhD for example). However, I don't think you can declare non-resident tax status in Canada, as you must always be able to show that your permanent home is your country of origin and that you intend to return after you complete your degree program.
I am not a lawyer or a tax expert, so take the above advice accordingly.
Location: Western Hemisphere
Posted on: 04-04-11 17:19:21
Quote:
Originally posted by Portia
My uncle was working as an engineer in New York state. As I understand it he had to pay American income tax and then pay to the Canadian government the difference between what he paid in the U.S. and what his tax would have been here. This was about 10 years ago so it may have changed.
Thank you. I well versed regarding this. I have been doing this for several years, but as a commuter from Canada. Hence, I've been a tax non-resident of US and a tax resident of Canada. What I am asking is little different.
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Dimple2001
Location: Western Hemisphere
Posted on: 04-04-11 17:22:10
Quote:
Originally posted by homer729
Yes, I think it is possible to be treated as a tax resident of two countries. For example, if you are working on a TN visa in the USA and you reside in the US for most of the year, you will probably be considered a resident alien for tax purposes by the IRS. However, it might be tricky for you to claim non-resident status in Canada, as that might imply that you have an intent to seek residence in the USA, and therefore that you possess immigration intent. As TN is a non-immigrant visa class, you are not allowed to demonstrate immigration intent without violating your visa status.
Similarly, if you are an F-1 student in the USA, you are considered a resident alien for tax purposes after your first five years in that visa class (so say if you do a PhD after BSc, or you are doing a long PhD for example). However, I don't think you can declare non-resident tax status in Canada, as you must always be able to show that your permanent home is your country of origin and that you intend to return after you complete your degree program.
I am not a lawyer or a tax expert, so take the above advice accordingly.
Thank you.
Tax residency is entirely different from residency for immigration purposes and they are treated differently. For example, you can be on TN, live in the US with no ties to Canada and be treated as resident for tax purposes in the US while being a tax non-resident in Canada. By doing so, it does not mean you are intending to immigrate or otherwise OR abondoning Canada or otherwise.
I am strictly inquiring regarding tax residency.
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Dimple2001
Quote:
Originally posted by dimple2001
Is it possible to get into a situation where you could be treated as a tax resident of two countries?
-- Yes. If you are a US resident, then file your US taxes and you could claim the foreign tax credit (Tax paid in the USA) on your Canadian return.
Quote:
For example, I have all sorts of ties to Canada, hence naturally a tax resident of Canada. However, I am working and living in New York state. The US tax forms state if I am living for more than certain days, it would make me a tax resident of US.
-- You could be a factual resident of Canada. You might want want to see this:
http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/tmprry-eng.html
--Also, if you are filing US 1040 as a resident, do not forget to file form 8891 (if you have Canadian RRSPs).
Just curious - why would you wish to pay taxes in Canada when you cut your tax related ties & be exempted from Canadian taxes ?
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