taxes under TN status in US

I am paying taxes from my paycheque as if I am an American citizen. I'm working as a social worker under TN status. I am living in San Francisco to work, so I'm assuming I will be considered a resident for tax purposes. I really have 2 questions.
1) Am I still considered a resident of Canada? I'm from Ontario and go back to my Canadian residence, which is my parents' place, every couple months. So do I claim NRA or RA for US tax purposes?
2) Will I have to pay taxes to both governments from my income? What procedure must I go through in order to ensure I'm filing correctly? or could someone at least tell me how and/ or where I can find this information?

thanks for any help!
Peace

As long as your main home and job are in US and youhave little ties in Canada, you are considered to have moved away from canada on the day you left, so should file a deaprture tax return in Canada based on the Emigrants guide from CRA.You tax obligation for non-Cdn income would have ended on that date.

So, for US purposes, you are condsidered resident from that day as well. You are likely dual-status for the year you move (see IRS Pub 519) but can file a full year 1040 based on the tax treaty, reporting all world income for the year on it,
See forums.serbnsli.com for a more detailed discussion if you wish.

1) Am I still considered a resident of Canada? I'm from Ontario and go back to my Canadian residence, which is my parents' place, every couple months. So do I claim NRA or RA for US tax purposes?

It's up to you really, there is a complicated calculation under the tax treaty but essentially if you want to be a resident of the US for tax purposes you can, if you want to be a resident of Canada you can, just means you have ties to one country or the other usually (DL, healthcare, etc.) Generally what I recommend is that if you're spending less than a full calendar year in the US (i.e. Jan-Dec) then it's not worth the effort of moving your tax home from one country to the other and the CRA and IRS might not believe you anyway.

2) Will I have to pay taxes to both governments from my income? What procedure must I go through in order to ensure I'm filing correctly? or could someone at least tell me how and/ or where I can find this information?

IRS publication 519 - but be aware of the fact that the tax treaty between the US and Canada is very comprehensive and eliminates a lot of the things 519 talks about, like non-resident alien tax.

If you move your tax home to the US, you file a pro-rated T1 for this year, and file dual-status in the US. If you keep your tax home in Canada, you file a T1 as normal and a 1040NR in the US. You claim a foreign tax credit using forms T2209 and T2036 so you don't get taxed twice. The T1 general guide explains how to do this.

If your income is over $100,000 then the IRS may want you to file an 8833 with your 1040NR if you do it that way. I have no idea how to fill in that form!

Usually people move their tax home to the US because the taxes there are lower, it's a good idea to sit down and actually work it out using both methods, resident and non-resident and then you can make an informed decision. For example you may say to yourself that you're staying for 2 years but you're paying more tax doing it that way - but it's not worth the hassle of moving your tax home so it saves cutting all your ties to Canada.

Also be aware of the fact (which IRS publication 519 will bring home to you) that moving your tax home back to Canada later on is a bit of a pig, lots of forms you potentially have to file, they're all listed in there.

Don't forget that in US, non-resident tax is less favorable than resident tax, so it rarely makes sense to try to insist that one is non resident when borderline. 1040NR is not a favorable tax form.

As a Cdn, one can always file a 1040 regardless of SPT or anything else, by Article XXV. No need to file dual status.

Really, unless one has a very quirky tax situation, IRS Pub 519, and 1040NR and dual-status are not the best way of proceeding. Filing as a full-year US resident and using 1116 is usually best, and is always accepted by IRS. This also makes it simpler for you to be Cdn non-resident, which is almost ALWAYS better that being tax resident. Samer on the way out. Your last year is simply a full year 1040.

And, steve, with the treaty, there is little ties that really need to be broken in canada to acheive either non-resident or deemed non-resident status for canada. The treaty residence tie-breakers only require that you 'outweigh' your Cdn ties with US ones. So as long as 'house and spouse' are in US, it doesn't matter what you have in canada.

None of this impacts the departure return or newcomer return you would file in Canada.

I really think a trip to forums.serbinski.com would be worth your while.

Don't forget that in US, non-resident tax is less favorable than resident tax, so it rarely makes sense to try to insist that one is non resident when borderline. 1040NR is not a favorable tax form.

Departure tax is a big reason. The main problem with 1040NR is filing jointly.

As a Cdn, one can always file a 1040 regardless of SPT or anything else, by Article XXV. No need to file dual status.

But it still has to be pro-rated though doesn't it, so what's the difference? Because if you have no US-source income prior to moving there's no 1040NR anyway.

And, steve, with the treaty, there is little ties that really need to be broken in canada to acheive either non-resident or deemed non-resident status for canada. The treaty residence tie-breakers only require that you 'outweigh' your Cdn ties with US ones. So as long as 'house and spouse' are in US, it doesn't matter what you have in canada.

I'm aware that having a house and a spouse overrides pretty much everything else - a lot of people don't have that. If you're single and renting it's not as clear cut (especially if you own a property in Canada), which is why the DL and things like healthcare are important. Certainly the CRA are going to deem you resident if you maintain your healthcare in Canada, assuming the Province will let you.

Don't forget that in US, non-resident tax is less favorable than resident tax, so it rarely makes sense to try to insist that one is non resident when borderline. 1040NR is not a favorable tax form.

Departure tax is a big reason. The main problem with 1040NR is filing jointly.

Steven, do you know anyone with loads of untapped capital gains... I don't. And even IRS regs allow joint 1040 filing for new residents, as does Art. XXV

As a Cdn, one can always file a 1040 regardless of SPT or anything else, by Article XXV. No need to file dual status.

But it still has to be pro-rated though doesn't it, so what's the difference? Because if you have no US-source income prior to moving there's no 1040NR anyway.
No need to pro-rate, since US citizens don't prorate. besides, there is no provision to prorate on 1040 (unlike T1)

And, steve, with the treaty, there is little ties that really need to be broken in canada to acheive either non-resident or deemed non-resident status for canada. The treaty residence tie-breakers only require that you 'outweigh' your Cdn ties with US ones. So as long as 'house and spouse' are in US, it doesn't matter what you have in canada.

I'm aware that having a house and a spouse overrides pretty much everything else - a lot of people don't have that. If you're single and renting it's not as clear cut (especially if you own a property in Canada), which is why the DL and things like healthcare are important. Certainly the CRA are going to deem you resident if you maintain your healthcare in Canada, assuming the Province will let you.

Single and renting is fine. "house and spouse" means not leaving a spouse behind, which is no problem for single person. And renting still means having an abode, which cancels out any Cdn abode, leaving you with "vital interests" as the tie-breaker, which strictly speaking, for single people, is their job.

Healthcare use to be a big tie. Not since the last round of IT-221, and the clearer regs on deemed non-residency. Now there are many OHIP holders who live 7 months a year in US, 5 months a year in canada, and are US residents for tax purposes and OHIP qualified. Keats' book goes into this.

thank you both for your help.
I don't want to cut ties with Canada...I'm back there quite frequently and plan to move back in a couple years... if I just file a regular 1040 in the US and the canadian foreign income forms will that suffice?

That is what I'd do. just watch our for CRA "deeming" you non-resident, which they can now do, if you are in US more than 183 days.

Steven, do you know anyone with loads of untapped capital gains... I don't.

It comes up pretty often, for example there was a lady in the immigration forum recently who was a pianist on EB-1 who ran into that problem. Where it usually is an issue (based on the postings on here) is if you have your own business. If you started it from scratch and it's worth something now there could be a capital gain because you're deemed to have disposed of it at the point of departure.

Especially if you're using a CCPC (which depends on your residency status), you can't really avoid it, it's all laid out on your schedule 125.

Since about 2004, it is likely for CRA to request almost anyone who lives in US and files a 1040 and a regular T1, to fill an NR73, for the pupose of declaring them "deemed non-resident" which, in effect, "pushes" them out of canada, for the very goal of getting to that deemed dispo tax. It is the very reason that the "deemed non-resident" status was created.

It is very diffuclt now to straddle the 2 countries.