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Canadian Working/Living in the United States. Year of arrival or departure

Updated: Apr 21, 2020

Under U.S tax rules for tax purposes, an alien is an individual who is not a U.S. citizen.

Aliens are classified as nonresident aliens and resident aliens.

Resident aliens generally are taxed on their worldwide income in the United States, the same as U.S. citizens. You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for calendar year.

Nonresident aliens are taxed only on their income from sources within the United States and on certain income connected with the conduct of a trade or business in the United States.

You should first determine whether, for income tax purposes, you are a nonresident alien or a resident alien.

If you are both a nonresident and resident in the same year, you have a dual status.

Closer Connection to a Foreign Country

Even if you meet the substantial presence test, you can be treated as a nonresident alien if you:

Are present in the United States for less than 183 days during the year,

Maintain a tax home in Canada during the year,

and Have a closer connection during the year to Canada in which you have a tax home than to the United States

Effect of Tax Treaties

The rules to determine if you are a U.S. resident do not override tax treaty definitions of residency. If you are a dual-resident taxpayer, you can still claim the benefits under an income tax treaty. A dual-resident taxpayer is one who is a resident of both the United States and Canada under each country's tax laws. The income tax treaty between the two countries must contain a provision that provides for resolution of conflicting claims of residence (tie-breaker rule). If you are treated as a resident of Canada under a tax treaty, you are treated as a nonresident alien in figuring your U.S. income tax. For purposes other than figuring your tax, you will be treated as a U.S. resident.

Dual-Status Aliens

You are a dual status alien when you have been both a U.S. resident alien and a nonresident alien in the same tax year. Dual status does not refer to your citizenship, only to your resident status for tax purposes in the United States. In determining your U.S. income tax liability for a dual-status tax year, different rules apply for the part of the year you are a resident of the United States and the part of the year you are a nonresident. The most common dual-status tax years are the years of arrival and departure.

To learn more about U.S. Tax Help and how we can work for you, call (647) 667-0040 to set up your first consultation.

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