US accountants

My wife & I are currently living in California. She has a TN visa and I have a TD visa. We are struggling to do our 2007 taxes. Any ideas for either a tax accountant or preparation service that can help with this unique arrangement, as the IRS seems to not even be able to help with our questions.

You may want to check with a local immigration law firm for a referral or recommendation. A law firm I spoke to recently in Nashville had accountants they referred their clients to. Make sure that the accountant you do use is conversant in prepping your taxes as an NR, two years in a row I had CPA's do my taxes - only to find they were done as resident 1040, even with their assurances they knew how to do them for foreign workers.

I’m assuming this is your first years filing and you need to do the combined Canadian / US return thing. We used a firm called KPMG which I think is fairly world wide. When we lived in Europe we used Ernst & Young. Both expensive and after the fact convinced left money on the table I could have saved. But…an imposible task to do on your own I think.

Frankly I think the best idea is to simply read IRS publication 519 (and the instructions for 1040NR). It will put you to sleep but it's what accountants use so why bother with them

Bear in mind you're supposed to state on your W-4 that you are a non-resident alien when you start work if you file as non-resident, which is why most people don't because it causes a problem for the employer (supposedly, I take it this means they can't add because it's really simple).

However from a paperwork standpoint it's definitely easier to file as non-resident, although you will probably pay more tax as Canadian rates are higher (and you have to pay the difference between the income tax rates). But it is cast-iron proof you have "non-immigrant intent" for TN-1.

On the US end you basically just file a 1040NR and 8840 (or 8833 in some situations) with your W-2 and any other paperwork you need to claim deductions, that's it. Because you're non-resident none of the other paperwork like the 8891 comes into play. Then you simply file as normal in Canada and claim a foreign tax credit for the US income tax you've paid.

This CRA publication explains it in fairly simple terms: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html

Note that there seems to be confusion in the IRS as to whether you use Form 8840 or 8833 to claim the tax treaty exemption. The CRA publication (written by the IRS) says to use 8833 if you meet the substantial presence test, 519 says to use 8840. My take on it is to use 8833 only if 8840 doesn't cover your situation.

8833 can be used in any situation 8840 can be used; however 8840 can only be used in situations that apply to non-resident alien individuals (8833 can be used by non-resident corporations, trusts, etc.)

But…an imposible task to do on your own I think.

Far from impossible, the IRS do seminars on how to do it, usually at the local Federal building.

When I went to one the guy doing it said to us: "Whatever you do, don't phone the regular phone number for help, they haven't got a clue, use the non-resident number."

If you're in a simple situation, i.e. individual employed by a US company and that is your only employer and all the work is performed in the US, it's arguably easier to file as a non-resident than a resident in most situations, at least with the US paperwork. (Obviously there is the Canadian tax return to do as well). There are less deductions you qualify for so the tax form is less complex.

And it's definitely easier if you're a Canadian who has just moved there and still has Canadian assets such as an RRSP or a bank account holding over US$10,000.

Honestly it used to take me less than ten minutes to do my 1040NR. Basically you put your name and address on it and put down the info from your W-2 and any bank interest you've gotten.