DORFMONT[at]aol.com (Linda Dorfmont) wrote:

- quote -

You haven't told us where he physically works ( I assume CA)
and how many days of presence he has in the U.S. It is
quite possible that he passes the substantial presence test
and would be considered a US resident alien for tax purposes
unless he could show to the satisfaction of the IRS that he
has a closer connection to Canada.

Substantial Presence Test:
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:
1. 31 days during the current year, and
2. 183 days during the 3-year period that includes the
current year and the 2 years immediately before that,
counting:
a. All the days you were present in the current year, and
b. 1/3 of the days you were present in the first year
before the current year, and
c. 1/6 of the days you were present in the second year
before the current year.

Closer Connection
Even if you meet the substantial presence test, you can be
treated as a nonresident alien if you:
• Are present in the United States for less than 183 days
during the year,
• Maintain a tax home in a foreign country during the year,
and
• Have a closer connection during the year to one foreign
country in which you have a tax home than to the United
States (unless you have a closer connection to two foreign
countries, discussed next).

Even if he is a US resident the tax treaty should help avoid
double taxation.

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My friend, Sonia, has a new client who is a citizen and
resident of Canada and is working for a U.S. company on a
short term contract under the NAFTA agreement. His legal
paperwork stresses that he is Canadian, maintains a
permanent residence in Canada, and his contract is for only
a short time (management consultant on a construction
project).

Sonia asked her buddy at the IRS about whether the guy is a
resident of the U.S. or a non-resident for tax purposes. He
said the client is a resident. After I looked at all his
paper, I am almost certain he is a non-resident. He even has
a special SSN card with "not authorized to work without
permission of DHS". He has never worked in the U.S. before
and has never filed a U.S. tax return. His employer says
they will hire him for a project in Canada when he is
finished here. The employer in the U.S. is a subsidiary of
the Canadian parent.

Is he or isn't he a U.S. resident for tax purposes? There is
no doubt about California. They'll take anybody wherever and
whatever they are.

Linda Dorfmont E.A., CFP, CSA

<< ================================================== ===== > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >