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Hi David,
Thnaks for your prompt response. Actually my Canadian
accountant told me that I only have to pay Canadian
tax and that's why I never think I have to pay US tax.
I commute between Toronto and San Francisco every
other weeks and I work from home one week per month.
Unfortunately I have worked in California since 2000
and never pay any US tax. In addition, my US counter
part never ask me to file the 10-99 form. Please
advise if I start paying tax this year. Should I have
to file back for last 4 years as well? Approxmiately
what will be the penalty %?
Definately I have to call you for an hour appointment.
Please advise what type of document or information
that I have to prepare for this call.
Thanks,
XXXXXX
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david ingram replies:
You have changed the situation slightly. Your accountant may be trying =
to exempt you under Article XIV of the tax treaty. This article exempts =
a self-employed person with no fixed base in the US fro Federal Tax but =
you HAVE TO FILE a return to claim the exemption AND California does NOT =
recognize it. =20
If you qualified, you still have to do the US return and claim the =
exemption and "Would" have California income tax to pay. However, you =
would NOT owe US Social Security because you are living in Canada and =
being paid by a Canadian Company.
However, you are NOT a self-employed person as you have described =
yourself. You are an employee of a Canadian Company which is being paid =
for your specific services at a specific location in the US and you will =
likely appear to others to be an employee of the US company.=20
At any rate, with a TN visa, the US return is mandatory if you are =
performing services in the US. AND, one of the main criteria of a TN =
visa is that you can NOT be self-employed. You are considered a =
contract employee.
You should file back for 2001 2002 and 2003 at least because those aree =
still live returns.
2000 can still be asked for by the US governemt.
I should have a copy of your 2000, 2001 2002 and2003 returns and a =
record of the number of days you were in the US for those years.
We would pro-rate your earnings and you would owe US tax. Whatever you =
owed to the California State and Federal Tax authorities would be =
credited dollar for dollar against your Canadian Tax.
You need a US Social Security number as well.
Instructions and an application for a US SSN (Form SS-5) can be foound =
at:
http://www.irs.gov/pub/irs-pdf/fss5.pdf
Article XIV for independent services and Aricle XV for dependent =
services follow:
=20
Article XIV
Independent Personal Services
Income derived by an individual who is a resident of a Contracting State =
in respect of independent personal services may be taxed in that State. =
Such income may also be taxed in the other Contracting State if the =
individual has or had a fixed base regularly available to him in that =
other State but only to the extent that the income is attributable to =
the fixed base.
Article XV
Dependent Personal Services
1. Subject to the provisions of Articles XVIII (Pensions and Annuities) =
and XIX (Government Service), salaries, wages and other similar =
remuneration derived by a resident of a Contracting State in respect of =
an employment shall be taxable only in that State unless the employment =
is exercised in the other Contracting State. If the employment is so =
exercised, such remuneration as is derived therefrom may be taxed in =
that other State.=20
2. Notwithstanding the provisions of paragraph 1, remuneration derived =
by a resident of a Contracting State in respect of an employment =
exercised in a calendar year in the other Contracting State shall be =
taxable only in the first-mentioned State if:=20
(a) such remuneration does not exceed ten thousand dollars ($10,000) =
in the currency of that other State; or=20
(b) the recipient is present in the other Contracting State for a =
period or periods not exceeding in the aggregate 183 days in that year =
and the remuneration is not borne by an employer who is a resident of =
that other State or by a permanent establishment or a fixed base which =
the employer has in that other State.=20
3. Notwithstanding the provisions of paragraphs 1 and 2, remuneration =
derived by a resident of a Contracting State in respect of an employment =
regularly exercised in more than one State on a ship, aircraft, motor =
vehicle or train operated by a resident of that Contracting State shall =
be taxable only in that State.=20
> 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
>=20
> QUESTION:
>=20
> Dear Sir/Madam:
>=20
> 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.
>=20
> XXXXXXXX
> =
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D=3D=3D
> david ingram replies:
>=20
> Whoever set that up should be shot.
>=20
> Your first tax liability is to the State of
> California. Your second tax liability is to the US
> Federal government.
>=20
> You "may," but likely do NOT have a liability to
> Canada.
>=20
> 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.
>=20
> 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
>=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.
>=20
> 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.
>=20
> 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.
>=20
> 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.
>=20
> I guarantee that you are doing it wrong now.
>=20
> I charge $350 an hour Canadian. Call (604) 980-0321
> to arrange a phone conversation.
>=20
> =
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=
=3D=3D=3D=3D=3D
> Answers to this and other similar questions can be
> obtained free on Air every Sunday morning.
>=20
> 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"
>=20
> Those outside of the Lower Mainland will be able to
> listen on the internet at
>=20
> www.600AM.com=20
>=20
> Local phone calls to (604) 280-0600 - Long distance
> calls to 1-866-778-0600.=20
>=20
> Old shows are archived at the site.
>=20
> =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
>=20
> 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
>=20
> 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."
>=20
> =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
> 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:
> multi jurisdictional cross and trans border
> expatriate gambling refunds for the United States,
> Canada, Mexico, Great Britain, the United Kingdom,
> Kuwait, Dubai, Saudi Arabia, South Africa,=20
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> Cuba, Bahamas, Bermuda, Barbados, St Vincent,
> Grenada,, Virgin Islands, US, UK, GB, American and
> Canadian and Mexican and any of the 43 states with
> state tax returns, etc.
> income tax wizard wizzard guru advisor advisors
> experts specialist specialists consultants taxmen=20
> taxman tax woman planner planning preparer of
> Alaska, Alabama, Arkansas, Arizona,=20
> California Denver Colorado, Connecticut, =20
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> Texas Taxman and Tax Guru and wizzard=20
> wizard -=20
>=20
>=20
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