Taxes - TN status and first year residency choice

[canuckabroadinnyc]

I moved to NYC from Ontario in September to start a new job with a US employer (on TN status). I don't have any significant ties to Canada (i.e. no real property, spouse, significant investments, etc.) and am contemplating filing the 'first year choice' so that I am considered a resident of the US as of the date I arrived. I meet the requirements for this election and feel comfortable arguing that I've severed my ties to Canada (although I would also feel comfortable arguing the opposite if required). I was thinking that it would be beneficial to avoid paying Canadian tax rates on my US income (especially as my salary increased considerably as a result of the move - I was in the lowest tax bracket in Canada with my previous job, but would be in the highest if I included my entire year's income). However, I have heard that Canadians with TN status do not have to pay New York City tax (which in my case was quite significant). I would assume that this is only the case if they are treating themselves as non-US residents. Is this the case? If so - would it make sense to consider holding off making the first year choice? I've also read a few of the other posts which seem to caution against US residency given the difficulties associated with moving my tax home back to Canada should I decide to return.

Any advice would be much appreciated!

[Steven]

I think you'd have to talk to the NYC tax dept., that's a very specific question. I think it'd be unusual to be exempt from any sort of State or local payroll tax by virtue of filing non-resident (because despite this you are physically present when the work is performed), but obviously it's worth checking to make sure.

With TN-1 there is an additional problem to moving your tax home to the US (in addition to the other problems) which is that your job must be "temporary". However in order to move your tax home to the US you must sever residential ties to Canada. This means it makes it harder to show CBP that your work is temporary, although there is no statutory reason why you have to have residential ties to Canada in order to be in TN-1 (as opposed to most other non-immigrant categories), but the inspecting officer does have to be convinced your stay is temporary.

There have been a couple of people on here who've shown up at a POE with US plates on their car and been turned down for TN-1.

One thing I would say is that it might not be worth the hassle filing dual-status for 2008 if you were only in the US for three months, just say on your T1 you left on December 31st then next year you can file a 1040 instead. Although it does depend on how much money you save, obviously.

[axolotl]

However, I have heard that Canadians with TN status do not have to pay New York City tax (which in my case was quite significant). I would assume that this is only the case if they are treating themselves as non-US residents. Is this the case?

The NYC tax isn't based on your immigration status but on where you reside. If you're filing the NYS resident return, you won't be exempt from the City tax assuming you live within the 5 boroughs.

[canuckabroadinnyc]

Thanks very much for all your help!

[dannykool]

However, I have heard that Canadians with TN status do not have to pay New York City tax (which in my case was quite significant). I would assume that this is only the case if they are treating themselves as non-US residents. Is this the case?

The NYC tax isn't based on your immigration status but on where you reside. If you're filing the NYS resident return, you won't be exempt from the City tax assuming you live within the 5 boroughs.

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makes sense live just outside the 5 boroughs then...?