Personal Finance

Canada to US | H1B Visa | Tax Implications in Canada

  • Last Updated:
  • Dec 13th, 2018 12:04 pm
Member
Jul 8, 2013
335 posts
82 upvotes
Montreal

Canada to US | H1B Visa | Tax Implications in Canada

Hey guys,
I'll be working in Boston in a few months. Before anyone tells me to get a lawyer or accountant, I just wanted to see if anyone knew the answer here.

So here's my situation:
1. Will be on a H1B Visa, I DO have significant ties to Canada (bought a house).
2. I WILL be staying and working in the US for MORE than 183 days.

Will I have to pay only Canadian taxes because I have ties to Canada? Or only US taxes since I will be in the US for more than 183 days and the IRS will consider me a US resident? Which treaty will win in a tie-breaker in this case? I am aware of the foreign-tax credit in the US-Canada tax treaty, I just want to know whether it will Canadian or US taxes I will most likely pay.

Thanks!
3 replies
Deal Guru
User avatar
Mar 23, 2008
13006 posts
10009 upvotes
Edmonton
Basically, you pay both, but you get a credit for your US taxes when you do your Canadian taxes. So in the end, you’ll pay your Canadian taxes on your world income.

And just because you have a house in Canada doesn’t mean you can’t become a non-resident for tax purposes. If you rent it out, it’s just one factor in determining your status.

C
Deal Addict
User avatar
Apr 29, 2002
3855 posts
47 upvotes
Mississauga
You will definitely file US taxes and you may file Canadian ones. If you are required to file Canadian taxes you will get a credit for the amount you paid the IRS.

You can file an election for CRA to make a residency determination for you based on ties to both countries, but that is not recommended.

Frankly if you are just working for 6 months, I would aim to structure the time spent in the US to under 183 days based on the substantial presence test and stay a Canadian resident (ie: go back home, take vacation outside of the US).
Either way, you likely need to file a 1040NR for your US source income anyways, but at least you don't have to trigger other implications like TFSA taxation in the US and capital gains.
Deal Addict
Nov 12, 2014
1172 posts
1004 upvotes
Kingston, ON
You're still CDN resident since only going for 6 months.

File T1
File US1040NR
File MA NR return

If you're there for >183 days then you'll have to take Treaty position you are NR of the US...still need FBAR filings since those aren't negated by the Treaty....get some help with this.

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