Questions about Cdn citizen moving from Australia to USA

mplam
New Member



Joined: 22 Feb 2008
Posts: 4
Location: FNQ

Posted: Wed Apr 02, 2008 12:45 pm

 

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Hi,

This is my first post. I have a "unique" situation or at least I have not seen this topic.

As the subject says, I am a Canadian citizen (and I am not a citizen of another country) working overseas (Australia). I have a job offer to work in the USA. While I have worked overseas for a total of 12 years, I have never worked in the USA and am not familiar with visa, tax, estate, etc. issues of moving to and working in the USA. After reading numerous posts, I have gleaned a lot of information but still not sure how it all fits together and particular obstacles I might face.

Visa: The company that has offered me a job has mentioned a renewable visa (not a green card) which from other posts sounds like it would be a TN visa (I'm an engineer and that is one of the eligible jobs). I cut most residential ties with Canada for tax purposes when I went to work overseas (no house/property, no car, no dependents remaining in Canada, no OHIP coverage) and file a T1 (non-resident) return with the CRA. But I would no longer have a residence in Australia either. Do I need to re-establish ties in Canada to get a TN visa since it is a non-immigrant visa?

Taxes: For the new job, I would move to and work in the USA. This could happen before mid-year. So I think I would be considered a resident alien for tax purposes based on substantial presence (>183 day present in USA) test, according to the IRS website. I read that US residents must report world wide income on their tax return. How does the Canada-USA tax treaty apply to my case since I have been deemed a non-resident of Canada by CRA.

Estate: I have a Canadian will but I am wondering what others have done before moving to the USA.

Thanks in advance for any help.

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Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 819
Location: Calgary

Posted: Thu Apr 03, 2008 10:19 am

 

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That is obscure. Are you claiming the tax treaty filing between Australia and Canada? It sounds like you are if you are filing a T1.

The TN-1 residency thing is tricky, you need some sort of evidence of ties to Canada but that doesn't necessarily mean you need to own a house or something like that. There are loads of lawyers etc. on here who specialise in TN-1 who can probably give you a better idea.

The tax situation is pretty straightforward, you just carry on filing a T1 and claim the tax treaty between the US and Canada. Read the instructions: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html

You do have to report your worldwide income on your 1040NR but it's meaningless because you file 8840 and all the taxes go to Canada.

You are claiming your tax home as Canada so that's all that matters. The estate is also the same situation, your tax home is Canada, so the will works the same way as if you were physically there.

I think basically what you need to do though is establish residency in a province, this will make your TN-1 situation easier, also it makes your estate subject to the rules of that province. Filing a tax return for that province is one way of establishing a tie but for immigration purposes you might need more than that. But of course you will have to pay provincial income tax.
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Steve.

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mplam
New Member



Joined: 22 Feb 2008
Posts: 4
Location: FNQ

Posted: Thu Apr 03, 2008 4:56 pm

 

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Thanks for the comments Steve.

I was sort of thinking on a different line regarding tax residency. Since I have been working overseas many years and not kept a home nor have dependents in Canada during that time, the CRA has deemed me a non-resident. And I will be filing an Australian tax return mid-year 2008 (the Australian financial year is 1 July 2007 to 30 June 2008).

So if I go from working overseas to working in the USA, then I was thinking the CRA would continue to deem me a non-resident. I think the IRS would consider me a resident alien for tax purposes especially if I start the job in the US before July 2008 (I would be in the states for over 183 days in 2008). As a resident alien, I think I file a 1040 return and pay US taxes on my world income like a citizen of the USA. And any tax I pay on the T1 and Australian returns would be a foreign tax credit for my US return according to the tax treaties (the US has tax treaties with Canada and Australia). The combined US federal/state tax looks to be less than the Canadian fed/provinical tax, so I think I should be ahead?

As you pointed out, the visa may be an issue especially if I go this route. I will have to clarify the visa situation with the company making the offer.

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Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 819
Location: Calgary

Posted: Fri Apr 04, 2008 9:47 am

 

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You've got a whole world of options if you're just talking about the tax situation, ideally you just abandon the whole thing and just pay US tax, which in your situation wouldn't be hard to do as you don't have any residential ties to Canada already.

The problem with doing that in TN-1 status is that it can make it appear to the CBP that you intend to reside permanently in the US, which means you get turned down for a TN-1.

Not having any residential ties to Canada while being in TN-1 is what makes TN-1s so tricky. Especially if you do it long-term, because assuming you had residential ties to Canada, after five years the IRS can just deem you resident for tax purposes anyway, so at that point you have to cut residential ties to avoid dual taxation, and then you have to face this problem when you renew your TN-1 of not having any obvious ties.
_________________
Steve.

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