TN status, Canadian residency, Canadian benefits

Hello,

I have been reading this forum for quite a while now but still need some answers that I couldn't find.

I have TN status in Atlanta, GA expiring in December 2008. My wife and kids are with me and have TD status. We still have a house in Canada which we are trying to sell to minimize expenses (we figured that if we return to Canada, we will rent). I'm filling my income tax for 2007 (I was employed in Canada for the full year) and as residency I still say Canada and still use my Canadian address. Is there a problem with that?

Also, we are receiving Canadian CHild Tax benefits for our kids, will we continue to receive that even if we live here for the year, what about if I will get a new TN next year?

Do I have to return to Canada every 6 months to maintain Canadian residency and keep Canadian Health Inusrance?

The first bit is easy, file a 1040NR and complete IRS Form 8840 so that you don't end up paying US income tax as well.

Have a read of this: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html

The health insurance depends largely on the rules of the Province.

If you have no address in Canada when you sell your house and you plan on staying in the US indefinitely, you may as well sever all ties and simply become non-resident for tax purposes and pay only US tax. Have a look at the CRA non-residents tax website as there are catches to doing that, because of the exit taxes, non-resident taxes (e.g. on Canadian bank interest) and also the Canadian definition of residency for tax purposes is tougher than the one the US uses.

On a TN-1 you have to be really careful about your residency status for tax, because you may find if you ever have trouble renewing your TN-1 status that all of a sudden you have to move back to Canada and that will cause you a world of hassle with taxes. But it is generally cheaper to pay US taxes rather than Canadian ones.

Thanks for all the info,

I arrived in the US on Dec 29th, 2007 and started work here on Jan 2nd, 2008. DO I have to fill a 1040NR or IRS Form 8840 for 2007 or will I do it next year when I'll declare my 2008 taxes?

Also, I'm not sure about Canadian CHild tax benefit. Will that continue to apply?

If you're still using a Canadian address and are considered resident in Canada, then your T1 will be the same so all your tax deductions and benefits will stay the same. Presumably any payment from the CRA will be made to your address in Canada because that's where they think you live.

The only thing different from the Canadian side is that you have a W-2 instead of a T4.

You can file an 8840 until June 15th, but I'm not sure I'd bother worrying about 2007 from a US tax perspective. De minimis non curat lex! (Which is latin for: "If I were you, I'd pretend I arrived on January 1st.") Presumably you had no income for those three days so it's just an enormous hassle. As long as you're not claiming tax benefits in the US for 2007 I don't see the IRS caring much. Your T1 will also be more messy if you say you left on the 29th, but presumably you've figured that out already.

You have to be there for 183 days to meet the residency test anyway, have a read of: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html (Although I don't think it mentions in there that you can be resident for tax on the day you enter to start work, but I think they'd have to be incredibly pedantic to call you out on that one - just say you started work in January).