J1 tax deductions?

Hi,

I am hoping someone can help me out through these murky waters working in the US. I am a postdoctoral fellow in the us, being paid a stipend. Technically I have J1 status as a visiting scholar. I am unclear as to whether or not I need to be paying taxes in the US. Right now, I have federal taxes being deduced from my pay. Is this correct? I thought Canadians had a 2 year exemption window.

Thanks!

Any income earned in US from a US payor is subject to US tax. Your J1 status simply means that you are taxed as a non-resident (ie. only on that income, not any Cdn income), and you are not subject to paying FICA tax (SS and medicare).

You willfiel a 1040NR at year-end, figure out your US tax, and also file in canada, reporting all world income and figuring Cdn tax. You will use the US tax calculated as a tax credit.

In your status you can usually qualify for an exemption if you file an 8843 each year, I think on J there are rules about where the money has to come from though. Have a read of IRS publication 519, it's all explained in there.

Bear in mind that being non-resident in the US means you're still resident in Canada for tax purposes.

Even if you can claim an 8843 exemption, you're only exempt from FICA on US-source employment income, it's still subject to income taxes so you have to claim a foreign tax credit on T2209.