So, you have your shiny new TN status, and you’re off to live the American Dream. See you later Snow and Hockey and Plaid and Maple Syrup and Canoes and… Right, moving on.
When a Canadian citizen moves to the U.S. for work on a TN visa, they may need to file a US dual status tax return. Here are some important things to keep in mind:
First, it’s important to understand the dual status tax return requirements. As mentioned earlier, a dual status tax return is filed when you are both a resident and nonresident for tax purposes in the same year. In the case of a Canadian who moves to the U.S. for work on a TN visa, they will typically be a nonresident for the portion of the year before they move to the U.S., and a resident for the portion of the year after they move.
Second, it’s important to keep accurate records of all income earned before and after the move. Nonresidents are generally only taxed on their U.S. source income, while residents are taxed on their worldwide income. This means that any income earned before the move to the U.S. may only be subject to Canadian taxes, while any income earned after the move may be subject to both U.S. and Canadian taxes.
Third, it’s important to be aware of the tax treaty between the U.S. and Canada, which can impact the tax liabilities of Canadians who move to the U.S. on a TN visa. The treaty provides for a number of benefits, such as reducing or eliminating the U.S. tax liability on certain types of income, and providing relief from double taxation.
In conclusion, filing a dual status tax return as a Canadian who moves to the U.S. on a TN visa can be a bit of a process in terms of filings, but by keeping accurate records (Looking at you, 183 Day Rule) and being aware of the tax treaty, you can likely keep your taxes to a minimum while still staying compliant with multiple tax authorities.
**Note: What is written here is not formal tax advice. I’m not your CPA. It’s possible, or dare I say even probable, that the comments and opinions expressed here contain material errors, or that important stuff has been left out. Don’t use this info to make important decisions. Hire a pro to help you.