Canadian working in US - W2 and 1099 for different states

I am a Canadian (living in Ottawa, Ontario) that travels to Atlanta GA for work almost every week.

I changed employers and have 2 forms for US taxes

1) W2 for state of Pennsylvania (for Jan 2008)

2) 1099 for state of Ohio (for Feb 2008 to Dec 2008)

I have tried to do my taxes online but for some reason cannot get the US state taxes to calulate correctly.

Question 1

It seems when I enter my W2 for state of PA online tax software it does calulates everything correctly, but when I enter my 1099 for state Ohio it seems to calculate tax for PA. Not sure how to get teh state taxes to work correctly. Any help ?

Question 2

Is the a non-resident tax credit or exemption that I can receive on my US taxes. Any other tax saving tips?

Question 3

Anyone know a tax accountant in Ottawa? Or software online that anyone recommends?

Thanks for your help.

P

First of all, what immigration category are you in, because if you're TN-1 you should usually get a W-2. I'm hard-pressed to think of a situation in which you could get a 1099 and it doesn't sound as though you are in one because you're non-resident.

I'd give up on trying to use any sort of software, you're in an unusual situation. Get the forms and read the instructions. (Although you can probably use QuickTax for the Canadian end of it).

If you live in Canada you have to file a T1 and use the amounts from your W-2 and 1099 to calculate your foreign tax credit on forms T2036 and T2209. You can claim FICA taxes on your W-2 due to tax treaty provisions. The general guide for the T1 explains how to claim a foreign tax credit. You can either use the exchange rate on the dates you were paid (from www.bankofcanada.ca) or the CRA average rate for the year, whichever works out better for you.

On the US side you need to file a 1040NR together either with 8840 (if you were in the US less than 183 days) or an 8833 tax treaty claim (in all other cases). 8833 is quite hard to fill in, best bet is to call the IRS non-resident dept. in PA, all the contact details are listed in IRS publication 519.

You use your W-2 and 1099 to complete 1040NR.

You'll also need the tax forms for each State, and depending on what State law says you'll have to pro-rate any deductions you receive to the number of days you worked in each State.

The wrinkle is your 1099, which from the sounds of it may not have been issued correctly as non-resident aliens usually get 1042 in place of 1099, but either form is rarely used in the case of employment income for non-resident Canadians (because 1042 isn't necessary due to the tax treaty). On TN-1 you usually have to be directly employed, which means you must be issued a W-2 (with NRA tax withheld). You can sometimes end up in a situation of getting a 1099 if you work for one US employer who sub-contracts you to another, but this doesn't sound like your situation.

If they haven't withheld FICA and you were directly employed then you're liable to them, both employer and employee parts (unless it's exempt for some obscure reason). If they issued you a job offer letter for your TN-1 then by definition you were directly employed by them and they should have done the withholding tax.

You need to contact your employer to sort that one out and if that doesn't work out you need to ask the IRS for help really. Or get an accountant, but they'll charge you a mint.

If you talk to the IRS and they recommend registering as a non-resident alien self-employed person, ignore them, they're wrong, unless your immigration category is E-1 or E-2. Just tell them your employer screwed up and issued you a 1099 and you want to sort out the tax they should have withheld.