FACTUAL RESIDENT or Foreign tax credit , Canadian working in the US



I am a Canadian resident working in the US on a TN visa. I pay the following
taxes every pay stub in the US:

Federal Income Tax
California Income Tax
Social Security (FICA)
Federal Medicare
California Vol. Disability

Can I get foreign tax credit for all of the items above when I file my
Canadian tax return?


david ingram replies:

The answer is yes but you likely do NOT need to file a Canadian return
unless you have left your family back in Canada and are visiting often and
not intending to take them to join you in the US. If they are going to join
you in the US and just waiting to finish the school year, sell the house,
etc., you may be filing a Canadian return but you are not taxable in Canada.

[email protected]: Please see bottom of message if you wish to unsubscribe.

My_question_is: Canadian-specific
Subject: non-resident filing
Expert: [email protected]
Date: Sunday January 21, 2007
Time: 10:49 PM -0500


Hi David,

I have been a TN visa holder since 2005. In 2005 I was taxed as a factual
resident of Canada since my spouse and children were left in Canada. In Sep.
2006 after my spouse and children moved to US, Revenue Canada determined we
both were non-residents “as of” the day they departed from Canada to US. I
did not have any other ties in Canada before my spouse and children left

I am wondering if I should treat myself as a full year non-resident for 2006
Canadian tax return or still a factual resident from Jan. 1 till the day my
spouse and children moved to US. As CRA’s resident determination used the
word “as of Sep. xx”, my first instinct is that I have to file a part year
2006 Canadian return as a factual resident. Thus, I will be taxed on my US
incomes as exact what I was taxed in 2005. However, after reading one of
your response to a person with the similar situation (see below), I got
confused. Should I think of myself a non-resident for full 2006? If it is, I
have actually no need to fill Canadian return because I had no Canadian
incomes in whole year. If so, will my spouse also be treated this way and
file a non-resident tax return for the days living in Canada in 2006?
david ingram replies:

You fall into the Wolf Bergelt Tax case and I believe you were a
non-resident from the day you left. If the intention is to leave and your
spouse and children follow later, you may be a factual resident but as such,
you get to deduct the US earnings on line 256 under Article IV of the US
Canada Tax Convention (TREATY).

You can find the Wolf Bergelt case in the middle of about 25 pages in the
"US/Canada Taxation" section in the second box don on the right hand side at

To really make it work, you must have equal or more "family" things in the
US. therefore, you get the spouse and kids (half the time now it is the
wife with the TN or H1B or H1A or L1) down to visit you every month instead
of you coming back to Canada every week.

They get their US video store rental cards, you give up your Canadian
Medical, get a US driver's licence and get your car registered in the US

You get US credit cards immediately and give up your Canadian cards. (while
reading the Wolf Bergelt case, make sure you read the Dennis Lee case as
well and study Article IV of the US Canada Tax Treaty which is at two or
three pages in to the start of the section)

i.e., the family has to have a nexus in the US as big as Canada to escape
the CRA Taxman..

This is your email answer I was talking about.
QUESTION: Hi, I have a question regarding my resident status for tax
purpose. I moved to the US to start a job in October 20 2005 on a TN-1
I have filed the form NR73 and Revenue Canada have replied that I am a
non-residence as of Oct 20 2005 because I have nothing left in Canada
basically. However when I try to fill in the T1, they have a few option
regarding my residence status in box 117. Am I a non-residence or a deemed
resident of Canada because I stayed for 183 days or more in 2005? I called
CRA and they give me different answers. Really appreciate your help.