Taxation of Canadians in America. David Levine

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СКАЧАТЬ (remember, this is part year as a nonresident and part year as a resident), you can choose to be treated as a US resident for the entire year if all of the following apply:

      • You were a nonresident alien at the beginning of the year.

      • You were a resident at the end of the year.

      • You are married to a US citizen or resident alien at the end of the year. If you are single at the end of the year, the election cannot be made.

      • Your spouse also joins you in making the election.

      When the election is made, both you and your spouse are treated as if you were resident of the US for the entire year, meaning you will have to report and pay tax on worldwide income for the entire year. There are two possible elections to be made:

      • One that allows for you to file jointly.

      • One that allows the resident spouse to treat the nonresident spouse as a resident.

      You are probably thinking to yourself, why would I want to report all of my income to the US when I would normally have to report only the income I earned since moving to the US; wouldn’t that cost me more in taxes? As we mention throughout the book, you will nearly always pay less tax as a US taxpayer than as a Canadian taxpayer. We go into the specifics as to why this is true in Chapter 9.

      You might be saying, even if the US is less expensive, won’t I be paying tax twice since I will be reporting the income earned in Canada, to Canada and to the US as well, if I make this election? The answer is that you will be reporting the income twice, but you will only be paying tax once because of the Treaty and foreign tax credits. While there can be unusual circumstances where it would not be better to make the election to be a US resident for the full year and report all of your income in the US, the large majority of the time the election will be to your benefit.

      As a resident alien, you frequently continue to have income from Canada. Which country gets to tax that income and how it is taxed is spelled out in the Treaty. For example, the Treaty will prescribe the withholding rates for the different types of income. It will also spell out situations in which you or various types of income may be exempt from tax in one country or the other. (See Chapter 3, for a detailed discussion of the Treaty.)

      Individuals generally cannot enter the US without being a US citizen, green card holder, or visa holder. The following are common immigration visas:

      • Business Visitor Visa (B-1)

      • Visitor for Pleasure (B-2)

      • Treaty Trader (E-1)

      • Treaty Investor (E-2)

      • Student Visa (F-1)

      • Dependent of Student (F-2)

      • Professionals (H-1B)

      • Seasonal Agricultural Work (H-2A)

      • Unskilled Worker (H-2B)

      • Nonimmigrant Trainees (H-3)

      • Dependents of H Visa Holder (H-4)

      • Exchange Visitor (J-1)

      • Executive or Manager of Foreign Company (L-1)

      • Listed in Treaty (TN)*

      *Note: The North American Free Trade Agreement (NAFTA) came into effect January 1, 1994. NAFTA established an immigration category called Trade National (TN). It permits people to come in as nonimmigrants on the basis of being a “professional” listed on a schedule to NAFTA. The TN visa is valid for three years and may be renewed for an unlimited duration, as long as the visa holder maintains his or her nonimmigrant intent. The list of professionals include accountants, engineers, scientists, research assistants, medical and allied professionals, scientific technicians, disaster-relief insurance claims adjusters, architects, lawyers, economists computer systems analysts, management consultants, and others. Professionals require at least a Bachelor’s degree.

      Table 2 is a flowchart illustrating various immigration options and whether you are eligible for each option.

       Table 2: US IMMIGRATION OPTIONS

      There are two business immigration categories: immigrant (permanent) and nonimmigrant (temporary). There are five preference levels within the employment-based immigration categories. The first preference is priority workers, second preference are professionals, third preference are skilled and unskilled workers, fourth preference are religious workers, and the fifth preference are immigrant investors.

      If your intent is to obtain a green card and live the in the US permanently, at some point you will need to get onto the immigrant visa track so that you can progress from visa holder to green card holder and eventually citizenship, if you wish. For example, a TN visa and an H1-B visa are similar, but they are different in one important way, the TN visa does not lead to permanent residency, whereas the H1-B can.

      Table 3 illustrates whether or not your status would be considered a nonresident alien or resident alien.

       Table 3: YOUR STATUS: NONRESIDENT ALIEN OR RESIDENT ALIEN

      2. How Do I Get an Identification Number?

      If you have entered the US on a work visa or Green Card, you are eligible for and should receive a Social Security Number (SSN). An SSN signals to employers that you are legally eligible to work in the US. The SSN is therefore restricted to only those people with certain types of visas or a Green Card. To apply for an SSN simply complete the Application for a Social Security Card (Form SS-5) and mail or take it to the nearest Social Security Administration office.

      If you enter the US on a nonwork visa (typically as a spouse of someone who has entered on a work visa), you cannot receive an SSN and you will have to apply for what is called an Individual Taxpayer Identification Number (ITIN). The ITIN is generally not given out until there is a need to do so — typically for filing a tax return. In most cases, you will complete the Application for IRS Individual Taxpayer Identification Number (Form W-7) when you file your first tax return. Your tax return and the W-7 are filed simultaneously.

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