Stock trading questions with TN

Hi there,

Here is an odd tax related question. I have a TN and will be claiming non-resident status in Canada for this year ending as I moved in April 2008, so by the presence test, for tax purposes, I get deemed a resident. (even though I am not one for immigration purposes).

That being said, I am going to open a stock account with etrade etc etc, and they are saying that I need to fill out a W8 so that I am exempt from withholdings under the US/Canada tax treaty act.

If anyone does have knowledge, how would I circumvent this. My goal is to establish Canadian non-residency and US residency (for tax purposes only).

How would I appraoch this?

Thank you

CH

The first thing you can do is file the NR73 with the Canada Revenue Agency to establish your status residency (here's the link: http://www.cra-arc.gc.ca/E/pbg/tf/nr73/README.html)

Concerning the stock account, I've been wondering the same as my tax person did not know a thing about this. You can talk to your financial adviser where you'll be doing your transactions. It's funny, there's got to be tens of thousands of Canadians in the US on a TN Visa, yet the tax issue is such a mystery! I've been banging my head against the wall trying to find the same answers you are looking for.

It's also strange that we get labeled residents for tax purposes of the US when they are so adamant to remind us that not only is a TN not a "Visa" but a non-resident status with a strict permission to work.

If you're resident for tax purposes then you don't use W-8. Tell them you meet the substantial presence test and give them your US address.

This answers a lot of questions for people on TN-1 and more importantly contains a long list of IRS publications which contain more information: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html

Bear in mind the IRS wrote most of that document, they fail to take into account Canadian residency requirements which put a different spin on some of the information. I.e. the IRS will suggest you do things a certain way, but you need to be aware of the fact that may not jive with your Canadian tax situation, so work it all out very carefully.

Once you sever your ties to Canada, just open the account just as if you're full year resident. Brokerages usually don't withhold taxes but do report all your stock sales, interests and dividends to IRS. You'll have to pay the taxes when you file your taxes next year.