Tax Question: UK citizen/Canadian Resident living in U.S.
 

Hi,

I've started working in the U.S. earlier this month and need to figure out what I'm supposed to do with taxes...I am here on a J-1 visa, prior to moving here I have lived and worked in Canada for around 4 years and paid my taxes there. My J-1 application was based on my Canadian residency and I know there is a tax treaty between the U.S. and Canada but am struggling to understand what this means to me. It seems that as I'm a non-resident alien that I can withhold tax from my income here? Is this correct? Also I'm wondering whether there is anything to be gained from being a UK citizen as I know they also have a tax treaty with the U.S. also. I know that as I've earned money in Canada this year I will have to file a tax return there. Any suggestions, thoughts or insight would be appreciated before I approach a tax specialist.

Thanks,
Nathan

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

How can you be a Canadian resident if you are living in the US...doesn't that mean you've given up your Canadian residency?

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

J1s are a different kettle of fish from the visas most frequently discussed around here. J holders indeed appear to be treated as non-residents for tax purposes. The information is contained in IRS publication 519, but the language is a bit hard to follow.

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

That's not what I meant...how can you be a resident of one country when you live and work in another?

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

Canadian PRs are a different kettle of fish than US ones, too. They don't need to stay as close as US PRs to keep their status.

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

OK thank you for explaining.

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

Meauxna has talked about how Canadian PRs can keep their status.

The tax rules are another issue completely, and many Canadian citizens/PRs, even when they become tax resident in another country, remain tax resident in Canada because they have not severed enough residential ties to Canada.

In a tax context, dual residency is not unusual. Sometimes double tax treaties have provisions to resolve this.

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

That's correct, the Canadian government are fairly lenient on maintaining residency. I have to be physically present in Canada for just two years out of every 5.

Thanks Bill_S for the 519 pointer. I've had a look at this but as you say, it's hard to follow the language. I think I'll give a tax company a call on Monday to get some advice.

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

Hello,

I am new here but I thought I can contribute as I am a Canadian living in the USA and dealing with all those tax issues as we speak.
The day you left Canada you needed to file a form declaring you as non resident. If you owned a Real estate in Canada in which you are intending to rent out, it will be considered world wide income in the USA. In Canada you need to file NR6 and NR4 to assign an agent to represent you in Canada and collect 25% withholding from the rent until you file for income tax (even if the net income from rent is 0$ they expect you to file). Otherwise you will be penalized 25$ up to $2500 plus interest and you wont be able to use deduction to reduce income when you file your income tax in Canada.
You also are suppose to declare all your money and assets to pay exit tax when you left to the USA. You dont pay tax on cash but you do on your investments.
Remember you might be considered resident of Canada for tax purposes but you wont have any right to medical!
Canada might be "lenient" as far as residency which means they will do everything in their power to consider you a resident so they can tax you, fine you etc........
I suggest you google for cross border tax advice. I have a very reasonable accountant ($125 for free advice) who is helping us now he is in Toronto but he can help you anywhere you are to make sure you are legal tax wise on both sides of the border and that you maximize your tax benefits.

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

Don't forget two important things:

1. The time outside Canada doesn't count for citizenship so when you go back to Canada, you may have to restart the waiting time from scratch.

2. If you don't meet the 2/5 year rule, the Canadians are likely to have little sympathy for you.

Others would have got their Canadian citizenship first, especially if they had already been in Canada for 4 years.

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

be careful with the UK-US tax treaty... it's retroactive after two years..
as i unfortunately found out in my third year here :(

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

Unfortunately, I spent the first 3 years there as a temporary resident, which as I'm sure you know only counts as 1/2 time towards citizenship. So I would have had to spend a while longer there to get citizenship. I know the time I'm away won't count but I didn't want to pass up the opportunity I have in the U.S. right now.

Nugi,
If you would recommend your accountant could you please send me an email with the contact details. I'm new to the site too but I think there is an option to email if you click on my name. Thanks, Nathan

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

I know that Mark Serbinski specializes in US-Canada cross-border taxation. His web site can be found here. I have no connection with that company, I just know about it.

Re: Tax Question: UK citizen/Canadian Resident living in U.S.
 

I am dealing with Mark Serbinski and can recommend him. He is based in Toronto and is helping us with our situation that is a bit complicated than most.
We found him to be knowledgeable and reasonable in his rates.