Canadian & Foreign Treaties
This is archived information that pertains only to the 2002 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
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?
Benefits paid under the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), and Old Age Security (OAS) program to a U.S. resident or resident alien 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. Any benefit under the social security legislation of Canada that would not be subject to Canadian tax if paid to a resident of Canada is not 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: 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 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 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?
That 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. 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.
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 resident, 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, on 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 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 of a country that has a treaty with the United States and you are resident for treaty purposes for the taxable year.
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) or Form 1040A (PDF).
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 the previous year. You may file a joint tax return if your husband makes the choice to be treated as a resident for the entire year. Generally, you cannot claim tax treaty benefits as a resident alien on Form 1040 (PDF), U.S. Individual Income Tax Return. Please refer to Publication 519 (PDF), U.S. Tax Guide for Aliens, for additional information.
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 (PDF), 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. To meet this test, you must be physically present in the United States on at least:
- 31 days during the current year, and
- 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
- All the days you were present in the current year, and
- 1/3 of the days you were present in the first year before the current year, and
- 1/6 of the days you were present in the second year before the current year.
For purposes of the substantial presence test, certain days of physical presence do not count. Please refer to Publication 519 (PDF), U.S. Tax Guide for Aliens, for additional information.
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. Your employer should be able to tell you if social security and Medicare taxes apply to your wages.
References:
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