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Hey, I just started graduate school on a F1 visa in Sept. 2003 and I'm wondering if I am eligible for Canadian nonresidency for 2004. I was only present in the USA for 111 days in 2003, but I will be here for the full 365 of 2004. I'm earning ~$30,000 CA as a teaching assistant and have a ~$45,000 CA tuition scholarship. The tuition scholarship is not a part of my disposable income, but as a resident of Canada I was still taxed on it for my 2003 return. Other Canadian students at my school either don't file Canadian returns or falsely claim zero income, but I'm curious if there is a legit way of getting around this. Thanks.
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Just to clarify, the Canadian federal tax on the teaching income of $30,000 is $3,579 at a rate of 16%. But, the $45,000 scholarship raises my income to $75,000 and an income tax of $13,844. The tuition fees are deducted as a tax credit but at only 16%. The final result is that I have a federal tax liability of $6,644. I get charged an extra $3,065 on the tuition because of the tax rate differentials. Foreign tax credit helps a bit but not much. Thanks.
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The problem students face is two-fold. First, their F1 staus requires them to maintain residency outside US for immigration purposes, thus, you are on record as having a Cdn residence. Second, you days of presence in F1 are meaningless in terms of establishing US tax residency, since these are exempted by IRS rules. So ANY residential ties (not just major ones) you have in Canada make you resident of Canada for tax purposes, as you cannot claim tax residency in US. Have you examined the Cdn return for some other tax deductions credits to which you are entitled?
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We're allowed the foreign tax credit on the teaching income and 16% of the tuition as credit. Sadly, the tuition gets taxed at 22% up to $64,368 and 26% beyond that. I've already claimed my moving expenses and have maximized my RRSP contributions, but I'm still going to be stuck with a huge CDN tax bill for 2004 without having ever stepped in the country. If there is no way of becoming a nonresident of Canada, I'm not sure what to do. Thanks.
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and you are paying no tax in US and sate?
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Tax and other financial matters concerning Canadian professionals
in the U.S. and U.S. citizens in Canada Includes income and estate taxation, social security, health
insurance, retirement accounts, cross border tax issues, and other matters affecting your pocketbook.
Topic Administrator: Mark T. Serbinski, CA, CPA of Serbinski
Weinberg, Ltd. CPA's and Serbinski Partners, Chartered Accountants
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