Frequently Asked Tax Questions And Answers
Keyword: Resident Alien
6.2 Social Security Income: Canadian & Foreign Treaties
In addition to U.S. Social Security benefits, I receive monthly
benefits from the Canada Pension Plan. I am a resident alien. Are my Canada
Pension Plan benefits taxable? How do I report them?
By provision of the income tax treaty between the U.S. and Canada, benefits
paid under the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old
Age Security (OAS) program to a U.S. resident are taxable, if at all, only
in the United States. These Canadian benefits are treated as U.S. social security
benefits for U.S. tax purposes. Thus, under section 86 of the Internal Revenue
Code, the portion of the benefits that is taxable will depend on your total
income. If your total income is above certain limits, a maximum of 85% of
your benefits will be subject to U.S. tax.
Canadian benefits that are treated as U.S. social security benefits are
reported on line 20a and 20b of Form 1040 or line 14a and 14b of Form 1040A.
References:
- Publication 597, Information on the United States-Canada
Income Tax Treaty
- Publication 915, Social Security and Equivalent Railroad
Retirement Benefits
- Tax Topic 423, Social Security and Equivalent Railroad
Retirement Benefits
13.1 Aliens and U.S. Citizens Living Abroad: Canadian & U.S. Tax Issues
I am a Canadian citizen living and working in the U.S. for a U.S. employer
on a visa. Do I need to file both a U.S. tax return and a Canadian tax return?
You must comply with both U.S. and Canadian filing requirements. In the United
States, you generally are required to file a return if you have income from the performance
of personal services within the United States. However, under certain circumstances,
that income may be exempt from payment of U.S. tax pursuant to the U.S.-Canada income
tax treaty. You need to determine what type of visa you have, and how that impacts
your residency status in the United States. If, based on the tax code and your visa
status you are treated as a U.S. resident, then your entitlement to treaty benefits
will be impacted.
References:
I am a Canadian citizen who worked in the U.S. for 4 months. Do I have to
file a U.S. income tax return as well as my income tax return in Canada?
In the United States, you generally are required to file a return if you have income
from the performance of personal services within the US. The type of return to file
would depend upon whether you are a resident of the U.S. for purposes of U.S. tax
law. There are several tests to determine residency, including the substantial presence
test, which is based on how many days you are present in the U.S. over a period of
three years. Refer to Tax Topic 851 for information about which return to file.
If you are simultaneously a U.S. resident under U.S. law and a Canadian resident under
Canadian law, you should consult the U.S.-Canada income tax treaty for rules that
would treat you as a resident of only one country. It is also possible that you may
have to file a dual-status return in the U.S. if you qualify as a U.S. resident for
only part of the year. Refer to Tax Topic 852 for dual-status information.
References:
13.4 Aliens and U.S. Citizens Living Abroad: Nonresident Alien - General
I am a foreign national and came to this country on June 30th of last year.
I have a H-1 visa. What is my tax status regarding residency nonresident alien, or
resident alien?
You were a dual status alien last year. As an H-1 visa holder in the U.S. for
183 days or more, you likely became a resident, for tax purposes, as of June 30th.
For the part of the year you are a resident alien, you are taxed on income from all
sources.
For the part of the year that you are not a resident alien, you are not taxed on
income from sources outside the United States, unless the income is effectively connected
with a trade or business in the United States.
Income from U.S. sources is taxable whether you receive it while a nonresident
alien or a resident alien unless specifically exempt under the Internal Revenue Code
or a tax treaty provision. Generally, tax treaty provisions apply only to the part
of the year you were a nonresident and only if you are a resident for treaty purposes
of a country that has a treaty with the United States.
For that part of the year that you are a nonresident, file Form 1040NR (PDF), U.S. Nonresident Alien Income Tax Return. For that part of
the year you are a resident, file Form 1040 (PDF) . Refer
to Tax Topic 852 for dual-status information.
References:
I have an H-1 visa and my husband has an F-1 visa. We both lived in the
United States all last year and had income. What kind of form should we file? Do we
file our taxes separately or jointly?
You will have met the substantial presence test and will be taxed as a resident
alien for last year, while your husband is likely to be a nonresident alien. Refer
to Tax Topic 851 for an explanation of the relevant tax forms. You may file a
joint tax return if your husband makes the choice to be treated as a resident for
the entire year. Generally, however, you cannot claim tax treaty benefits as a resident
alien. Please refer to Publication 519, U.S. Tax Guide for Aliens ,
for detailed instructions on making this choice.
References:
I was an international student (F-1 visa) until October 1, then my visa
status was changed to H-1. Should I file my income tax return as a dual status or
nonresident alien?
Assuming you were not in the U.S. on your F-1 student visa for over 5 years, you
may file as a nonresident for the entire year or, if you qualify under the first year
choice, you may file as a dual status alien. Please refer to Publication 519, U.S.
Tax Guide for Aliens, for additional information.
References:
13.5 Aliens and U.S. Citizens Living Abroad: Nonresident Alien - Tax Withholding
I entered the U.S. in August and I have a J-2 visa with an Employment Authorization
(work permit). Can I be considered as a U.S. resident for tax purposes under the substantial
presence test? Since my visa does not allow me to stay in this country am I subjected
to social security tax and Medicare tax?
You will be considered a U.S. resident for tax purposes if you meet the substantial
presence test for the calendar year. As an exempt individual, a J-2 visa holder will
not initially meet this test.
For purposes of the substantial presence test, certain days of physical presence
do not count, such as the days during which you were an exempt individual . Please
refer to Publication 519, U.S. Tax Guide for Aliens , for a detailed
explanation of this issue.
In general, U.S. social security and Medicare taxes apply to payments of wages
for services performed as an employee in the United States, regardless of the citizenship
or residence of either the employee or the employer. In limited situations, these
taxes apply to wages for services performed outside the United States. This exception
does not apply to a derivative visa holder.
References:
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