QUESTION:
Hi,
I am a Canadian citizen who works in the United-States under a TN visa. My
wife and 3 kids have stayed in Canada. I commute back and forth between my
home and workplace (tax home) on a weekly basis. I spent hours reading IRS
instructions and publications in order to file my income tax return. Based
on IRS Publication 519, I am a dual-resident taxpayer and need to apply the
tiebreaker rule contained under Article IV of the “United States - Canada
Income Tax Convention”. Even if my annual income is lower that 100 grand I
want to complete IRS form 8833 to clarify the basis on which I have decided
to file the 1040 U.S. Nonresident Alien Income Tax Return from. Even if form
8833 contains few questions they are not easy to answer. Therefore, I am
seeking help to answer Line 2, 4, and 5 based on the information I provided
above.
Thanks for your help,
SXXXXXXX
=======================================================
david ingram replies:
The form can be found at:
http://www.irs.gov/pub/irs-fill/f8833.pdf
I do not know what you are trying to exempt.
You cannot exempt the US earnings because they are over $10,000.
You can only exempt non-US income which would usually means rents, interest,
dividends or wages earned at another job in Canada. If your intention was
to move to the United States and apply for a Green Card, I would take the
opposite position and claim that I was a factual resident of Canada but a
tax resident of the USA and NOT pay tax to Canada even if my wife and
children were in Canada. I would report my US earnings to Canada and exempt
them on line 256 of the Canadian Tax return.
In that case, I would file a joint 1040 (not a 1040NR) with my wife and kids
and save about $8,000 in taxes.
On the other hand, if you do not intend to move the whole family down, than
a 1040NR and paying tax to Canada is the way to go.
For 2 you could go to the code but a simple Taxation of Interest or Taxation
of rents or taxation of dividends should suffice.
For 4 there are none that I know of for the items above.
For 5, Just tell your story and tell them how much rent, how much dividends,
how much interest or how much wages you received in Canada and that you are
exempting them.
Please note that you should have one 8833 for interest. Another for
dividends, Another for wages and another for rents and another for any
other item.
You should likely spend $350 and buy an (up to an hour) hour of my time by
way of a phone consultation.
If you do book one, make sure that you email with the Canadian income
figures first and I can give you the code numbers if you really want to put
them in.
And, go to www.centa.com and read the US/Canada Taxation section. Read
about Wolf Bergelt who was only gone for four months and still escaped
Canadian Taxation on his US earnings with his wife and children in Ottawa.
.
.
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