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----- Original Message -----=20
From: David Ingram at home - bus at [email protected]=20
Sent: Tuesday, June 29, 2004 9:17 AM
Subject: Does TN visa holder pay US and California taxes?
From: HXXX
My_question_is: Applicable to both US and Canada
Subject: Does TN visa holder pay US taxes?
Expert: [email protected]
Date: Monday June 28, 2004
Time: 08:32 PM -0700
QUESTION:
Dear Sir/Madam:
I am a Canadian working in San Jose, California on a TN visa. My =
company bills US company and I file my earnings through Revenue Canada =
that means I only pay Canadian tax. I wonder whether I am
subject to U.S. social security tax or state tax. Thank you very much =
for your help.
HXXX
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david ingram replies:
Whoever set that up should be shot.
Your first tax liability is to the State of California. Your second tax =
liability is to the US Federal government.
You "may," but likely do NOT have a liability to Canada.
If you are only there for three or four months, you do have a Canadian =
tax liability but if you are there for more than six months and intend =
to stay for a while and your family is with you in California, than you =
will likely have escaped Canadian Tax.
If a Canadian Company has transferred you to the state of California for =
a period of less than five years and used a TN visa instead of an L visa =
because it is easier, The US company can write to the Social Security =
Administration and ask to exempt you from US Social Security. In this =
case which is very common, you pay California and US federal tax and =
then pay Canadian Canada Pension Plan. =20
If you have a wife and children in Canada and commute every week and it =
is only a year or year and a half assignment and then you absolutely =
intend to return to Canada to live permanently, you are a deemed =
resident of Canada and pay tax to California First, The United States =
Government Second (the tax you paid to the State of California is a =
deduction on the US Federal Return which is why I say you have to pay =
California first) and Canada third. In this case, you would claim =
credit for any state Federal and Social security taxes paid to the US on =
Schedule 1 of your Canadian return.
If you have an application for an H1B or an L1 in the works and you =
intend to take your family tot he states to live forever when the more =
senior visas are issued (There are no H1's available until Oct 1 for =
instance and if you applied now would not likely get it until February), =
then you are a factual resident of Canada which means that you have to =
report all your US income to Canada but then "EXEMPT" it all on line 256 =
of your Canadian return under Article IV of the US Canada Income Tax =
Convention and would pay NO tax to Canada.
You are doing it wrong at this point. If you just started in 2004, it =
can be fixed easily. If you have already filed a 2003 return this way, =
you need to get it fixed right away and I would be glad to look after it =
for you. We can do this by fax, email, snail mail or courier.
At the very least, you should buy an hour of my time by phone before you =
end up with thousands of dollars worth of US and California tax =
penalties for failure to file and late filing.
I guarantee that you are doing it wrong now.
Article IV 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
-------------------
I charge $350 an hour Canadian. Call (604) 980-0321 to arrange a phone =
conversation.
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Answers to this and other similar questions can be obtained free on Air =
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier =
Partners and I 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
Local phone calls to (604) 280-0600 - Long distance calls to =
1-866-778-0600.=20
Old shows are archived at the site.
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David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321=20
[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 & =
the author and any and all non-contractual duties are expressly denied. =
All readers should obtain formal advice from a competent financial, or =
real estate planner or advisor & appropriately qualified legal =
practitioner, tax or immigration specialist in connection with personal =
or business affairs such as at www.centa.com. If you forward this =
message, this disclaimer must be included."
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This from ask an income tax immigration planning and bankruptcy expert =
consultant guru or preparer from www.centa.com or www.jurock.com or =
www.featureweb.com. Canadian David Ingram deals daily with tax returns =
dealing with expatriate:
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US, UK, GB, American and Canadian and Mexican and any of the 43 states =
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income tax wizard wizzard guru advisor advisors experts specialist =
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- David Ingram 's CENTA Services Group in West Vancouver BC Canada
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