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QUESTION:
I am a Canadian Citizen working as a foreign scholar at a US academic =
institution. I came to the US in Dec '02 on a TN VISA, although I lived =
with a friend and did not move here until January '03. I switched to a =
J1 VISA in Feb '03. After I switched to a J1, I was exempt from FICA and =
Medicare payments.
I have filed as a US resident for my 2003 US taxes. My question is; do I =
have to file in Canada for 2003, and if so, do I just file normally with =
the added foreign income?
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david ingram replies:
With a J-1 visa and as a student, most if not all provinces will allow =
you to remain a member of their medical plan. If you are taking =
advantage of this, you should file as a Canadian resident and report the =
US income on your Canadian return.
On the other hand, if you have a US driver's licence and US medical, you =
should not file in Canada and just file in the US as a resident.
This of course assumes that you have no income in Canada and all your =
income comes from the USA.
And, if you have exempted yourself from US medicare and FICA, You should =
be paying CPP to Canada which you can elect to do on a CPT-20 form.
In this case you would exempt your US income from Canadian tax by =
claiming an exemption under Article IV of the US /. Canada income tax =
treaty which reads as follows.
=20
Article IV - Fiscal Domicile - (it is the same number in most treaties) =
For the purposes of this Convention, the term "resident of a Contracting =
State" means any person who, under the law of that State, is liable to =
taxation therein by reason of that person's domicile, residence, =
citizenship, place of management, place of incorporation or any other =
criterion of a similar nature, but in the case of an estate or trust, =
only to the extent that income derived by the estate or trust is liable =
to tax in that State, either in its hands or in the hands of its =
beneficiaries. For the purposes of this paragraph, a person who is not a =
resident of Canada under this paragraph and who is a United States =
citizen or alien admitted to the United States for permanent residence =
(a "green card" holder) is a resident of the United States only if the =
individual has a substantial presence, permanent home or habitual abode =
in the United states and that individual's personal and economic =
relations are closer to the United states than any other third State. =
The term "resident" of a Contracting State is understood to include:=20
(a) the Government of that State or a political subdivision or local =
authority thereof or any agency or instrumentality of any such =
government, subdivision or authority, and=20
(b) (i) A trust, organization or other arrangement that is operated =
exclusively to administer or provide pension, retirement or employee =
benefits, and=20
(ii) A not-for-profit organization that was constituted in that =
State, and that is, by reason of its nature as such, generally exempt =
from income taxation in that State.=20
2. Where by reason of the provisions of paragraph 1 an individual is a =
resident of both Contracting States, then his status shall be determined =
as follows:=20
(a) he shall be deemed to be a resident of the Contracting State in =
which he has a permanent home available to him. If he has a permanent =
home available to him in both Contracting States, he shall be deemed to =
be a resident of the Contracting State with which his personal and =
economic relations are closer (centre of vital interests);=20
(b) if the Contracting State in which he has his centre of vital =
interests cannot be determined, or if he has not a permanent home =
available to him in either Contracting State, he shall be deemed to be a =
resident of the Contracting State in which he has an habitual abode;=20
(c) if he has an habitual abode in both Contracting States or in neither =
of them, he shall be deemed to be a resident of the Contracting State of =
which he is a national;=20
(d) if he is a national of both Contracting States or of neither of =
them, the competent authorities of the Contracting States shall settle =
the question by mutual agreement.=20
-------------------
If you read this right, you were not taxable in Canada in 2002. You =
WERE taxable in the US.
Answers to this and other similar questions can be obtained free on Air =
every Sunday morning.
Starting this Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of =
Cartier Partners and I, David Ingram will be hosting an INFOMERCIAL but =
LIVE talk show called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the =
internet at
www.600AM.com=20
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321=20
New email to [email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed =
information or consultation and is to be regarded only as general =
comment. Nothing in this message is or should be construed as advice =
in any particular circumstances. No contract exists between the reader =
and the author and any and all non-contractual duties are expressly =
denied. All readers should obtain formal advice from a competent and =
appropriately qualified legal practitioner or tax specialist in =
connection with personal or business affairs such as at www.centa.com. =
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