Art XIX US Canada Income Tax Treaty (Convention) - On a NATO-2 Visa in the US, married to US Citizen

My_question_is: Applicable to both US and Canada
Subject: Non Resident alien - On a NATO-2 Visa in the US, married to US Citizen
Expert: [email protected]
Date: Monday February 19, 2007
Time: 05:24 PM -0500


I am active duty military in the US as a non-resident alien, married to a US Citizen living in the US throughout the entire tax year.IRS Pub 519 chapter 1 says that we can make a declaration to be treated as US residents for the tax year and file jointly in the US with me declaring it as worldwide income. What are the implications from Canada - who has considered me a Deemed resident for the year and taxed me accordingly. Under the tax treaty the US should consider tax paid on foreign earned income as Tax Credits?

david ingram replies:

Under Article XIX of the US / Canada Income Tax Treaty you are not taxable on the US return on your Canadian Income.

You will report it as income on line 7 of the return and deduct it on line 21 as a deduction under Article XIX of the US / Canada Income Tax Convention (Treaty).

You might be tempted to try and put it on lines 23 to 35 but don't - it comes off on line 21.

The NICE part about this is that it gives your wife the lower joint tax rate without having to include your income in the marginal tax rate.

Article XIX follows in this older but similar question.
My_question_is: Applicable to both US and Canada
Subject: Canadian Government Employee living in US, working in Canada
Expert: [email protected]
Date: Tuesday January 30, 2007
Time: 03:11 PM -0500


I am a Canadian government employee who works in Canada. I am applying for permanent resident status in the US, and will be moving there shortly. I was wondering what me tax obligations would be to either countries. I was told that as a government employee, I would not have to pay the US tax since my income comes from the Canadian government and the US has a tax treaty with Canada stating that each other cannot collect tax from the governments of the other country. I would like to know all the information before I make my move. I do not own any property or investments in Canada, but I plan on keeping a Canadian bank account, as that is where my paycheque will go. I will have to cancel my health insurance and transfer my car over. Thanks you for any help on the situation.

david ingram replies:

Article XIX of the US/Canada Income Tax Treaty exempts an employee of the Canadian Federal Government from paying tax to the US government on their government paycheque when the Canadian lives in the US for any reason and the same situation applies in reverse.

For instance, a female US citizen working as a US border guard and living in BC Canada with her Canadian husband and three Canadian born children does NOT pay one cent of tax to Canada on her US Homeland Security income. She qualifies for BC Medical and will even qualify for a Canadian old age pension at 65 but does not pay tax on her US government income. However, any interest, dividends, capital gains or rentals or author's royalties ARE taxed by Canada.
This is the actual treaty article

Article XIX - Government Service

Remuneration, other than a pension, paid by a Contracting State or a political subdivision or local authority thereof to a citizen of that State in respect of services rendered in the discharge of functions of a governmental nature shall be taxable only in that State. However, the provisions of Article XIV (Independent Personal Services), XV (Dependent Personal Services) or XVI (Artistes and Athletes), as the case may be, shall apply, and the preceding sentence shall not apply, to remuneration paid in respect of services rendered in connection with a trade or business carried on by a Contracting State or a political subdivision or local authority thereof