Canadian student in USA - paying taxes w/ income from both countries

[Jacky321]

Hello everyone, when filing Canadian tax using turbotax, I didn't find field to enter USA scholarship. I've tried Ufile just now, also doesn't seem to work. Just wondering how you entered this number .   

Thanks

Jacky

[TakeruK]

The CRA agent I talked to told me to not enter US scholarships.

[MackPeters]

Hey everybody,

First time poster, this thread seems super relevant to the situation I'm in, I just wanted to bring it back to life in order to ensure that all of the same policies are still in place.

So here's the list:
1)Canadian studying in the US (I'm only in Undergrad, but I figure everything thats been talked about still applies)
2)The only income I had for the entire 2016 tax season was at my school, I received no money from Canada whatsoever. Was issued a w2.
3)I am however, married to an American. We still haven't decided whether or not we are going to stay in the states, so I don't necessarily want to file jointly which would allow me to file as a resident alien. Is this wise?
4)Also, my parents paid for my school and they are the ones who will reap the benefits of any claiming of tuition. I've gotten my school's official started on the tl11, so that should be taken care of soon, do I just need to fill out the bottom section of that and transfer the funds to my parents?

My next step was to call the CRA reps and contact IRS people, this just seemed to contain a wealth of knowledge so I figured I'd poke in here first before making any decisions. Especially now that I have this information and believe that my tax return, for both countries, was probably filed wrong last year...

What makes this situation even scarier is that the office for Foreign Student Relations at my school doesn't have any tax information at all, and I've just found out about the form 8843...I just really don't want to go to jail in either country!!!

Lastly, it was mentioned earlier the UFile is a good source for filing taxes and that foreign students cannot NETFILE, but need to print out documents. However, I own a Mac and UFile doesn't have a non-NETFILE option for mac...any other suggestions?

Thanks for any information you can provide!

[TakeruK]

23 hours ago, MackPeters said:

Hey everybody,

First time poster, this thread seems super relevant to the situation I'm in, I just wanted to bring it back to life in order to ensure that all of the same policies are still in place.

So here's the list:
1)Canadian studying in the US (I'm only in Undergrad, but I figure everything thats been talked about still applies)
2)The only income I had for the entire 2016 tax season was at my school, I received no money from Canada whatsoever. Was issued a w2.
3)I am however, married to an American. We still haven't decided whether or not we are going to stay in the states, so I don't necessarily want to file jointly which would allow me to file as a resident alien. Is this wise?
4)Also, my parents paid for my school and they are the ones who will reap the benefits of any claiming of tuition. I've gotten my school's official started on the tl11, so that should be taken care of soon, do I just need to fill out the bottom section of that and transfer the funds to my parents?

My next step was to call the CRA reps and contact IRS people, this just seemed to contain a wealth of knowledge so I figured I'd poke in here first before making any decisions. Especially now that I have this information and believe that my tax return, for both countries, was probably filed wrong last year...

What makes this situation even scarier is that the office for Foreign Student Relations at my school doesn't have any tax information at all, and I've just found out about the form 8843...I just really don't want to go to jail in either country!!!

Lastly, it was mentioned earlier the UFile is a good source for filing taxes and that foreign students cannot NETFILE, but need to print out documents. However, I own a Mac and UFile doesn't have a non-NETFILE option for mac...any other suggestions?

Thanks for any information you can provide!

This is a complex situation that I don't have full knowledge of. But here are some thoughts that might be helpful:

- If you file as a resident alien in the US, you may not be able to file as a resident of Canada anymore. This means that you cannot claim the TL11 thing and your parents cannot claim your tuition benefits. If you are a non-resident of Canada without Canadian income, you just file a blank return essentially. (My Canadian spouse living in the US with me makes no Canadian income and they do not file in Canada).

- I have no idea what's better for you. I highly suggest a consultation with a tax agent at H&R block or something. 

- You won't go jail!

- I use a Mac with UFile online (not the software). I have always been able to print out the documents. There's an option to download the PDF paper return. Actually, when I file my Canadian taxes with UFile online, they automatically detect that I am not eligible to NETFILE and direct me to the PDF. So look for that. If UFile doesn't say that you can't file online, make sure the info is correct! i.e. ensure that you are using your US address, which indicates them them that you are filing from outside of the country

[MackPeters]

6 hours ago, TakeruK said:

This is a complex situation that I don't have full knowledge of. But here are some thoughts that might be helpful:

- If you file as a resident alien in the US, you may not be able to file as a resident of Canada anymore. This means that you cannot claim the TL11 thing and your parents cannot claim your tuition benefits. If you are a non-resident of Canada without Canadian income, you just file a blank return essentially. (My Canadian spouse living in the US with me makes no Canadian income and they do not file in Canada).

- I have no idea what's better for you. I highly suggest a consultation with a tax agent at H&R block or something. 

- You won't go jail!

- I use a Mac with UFile online (not the software). I have always been able to print out the documents. There's an option to download the PDF paper return. Actually, when I file my Canadian taxes with UFile online, they automatically detect that I am not eligible to NETFILE and direct me to the PDF. So look for that. If UFile doesn't say that you can't file online, make sure the info is correct! i.e. ensure that you are using your US address, which indicates them them that you are filing from outside of the country

Thanks for your advice! The most reassuring part is that I won't go to jail...yay!

Also, I knew about none of this for my two previous years at school. The first year I made no american income, the second I made a little of both american and canadian, but luckily I was not married for either of those years. Should I file amended returns in order to cover my bases? 

[TakeruK]

2 hours ago, MackPeters said:

Also, I knew about none of this for my two previous years at school. The first year I made no american income, the second I made a little of both american and canadian, but luckily I was not married for either of those years. Should I file amended returns in order to cover my bases? 

I don't think so? I'm not sure what you mean though.

[MackPeters]

7 hours ago, TakeruK said:

I don't think so? I'm not sure what you mean though.

I read something about a form 8843 (see here https://www.irs.gov/pub/irs-pdf/f8843.pdf) about tax exempt individuals and how they basically need to prove that they are exempt. The first year I didn't file any taxes for the US, because I was told by the international student office that since I made no money here I didn't have to. The second year I did file taxes, but I went to a tax service offered at walmart, but there was at least one error (american opportunity grant given to me, which I was then audited for later and asked to give back because my school doesn't file the necessary forms for international students...) and I'm honestly not sure that I was filed as a non-resident alien. Also that second year I did not include my American income on my Canadian tax forms. 
Now with all this new information I'm not sure if I need to try and refile forms for previous years, or if I should just leave it and hope nothing ever comes up...

[TakeruK]

Oh I thought you had to file a 8843 with every tax return as a F-1 or J-1 student. 

If you are unsure, you should go to H&R Block or some other qualified tax agent that will take financial responsibility for your returns in case of an audit (not sure if the tax service at Walmart covers this). I know that at H&R Block, they will guarantee that they do it right, and will pay for any costs you face due to an incorrect return. They are pricey though, however, H&R Block offers a free audit of past returns. I did this for the past returns and it turns out I missed claiming $30 of credit. You only pay if you want them to file an amended return on your behalf. I chose not to, since it's $100 to do that and I would only get $30 in credit. 

I don't have any good tax advice for you since you are in a more complex situation than I ever was! But I do have some advice on tax filing:

1. If you are seriously concerned about whether or not you need to file amended taxes, I would definitely pay a professional to do it. If I tried to do it myself, I would spend tens of hours and probably still do it wrong. So if you decide you need to do something about the past returns, I would recommend paying someone.

2. The best tax advice comes from professionals who will take financial responsibility for their advice. So people like me on the Internet can provide experiences that help you decide what to do, but we're not experts! Similarly, the international student office are not tax experts. My school's International office has a strict policy of not providing any tax advice because they are not qualified. Instead, they pay for tax lawyers to come to the school and give workshops. I think it's unfortunate that your international office told you what they did, because I think it might be wrong. 

[MackPeters]

35 minutes ago, TakeruK said:

Oh I thought you had to file a 8843 with every tax return as a F-1 or J-1 student. 

If you are unsure, you should go to H&R Block or some other qualified tax agent that will take financial responsibility for your returns in case of an audit (not sure if the tax service at Walmart covers this). I know that at H&R Block, they will guarantee that they do it right, and will pay for any costs you face due to an incorrect return. They are pricey though, however, H&R Block offers a free audit of past returns. I did this for the past returns and it turns out I missed claiming $30 of credit. You only pay if you want them to file an amended return on your behalf. I chose not to, since it's $100 to do that and I would only get $30 in credit. 

I don't have any good tax advice for you since you are in a more complex situation than I ever was! But I do have some advice on tax filing:

1. If you are seriously concerned about whether or not you need to file amended taxes, I would definitely pay a professional to do it. If I tried to do it myself, I would spend tens of hours and probably still do it wrong. So if you decide you need to do something about the past returns, I would recommend paying someone.

2. The best tax advice comes from professionals who will take financial responsibility for their advice. So people like me on the Internet can provide experiences that help you decide what to do, but we're not experts! Similarly, the international student office are not tax experts. My school's International office has a strict policy of not providing any tax advice because they are not qualified. Instead, they pay for tax lawyers to come to the school and give workshops. I think it's unfortunate that your international office told you what they did, because I think it might be wrong. 

Honestly, you've given me way more than I had to start with. Even with just confirming my 8843 suspicions!

I went to Jackson-Hewitt, they typically just setup in WalMart during tax season to take some of the traffic away from their offices, but I may try H&R block instead because the person I went to really didn't see to know what was happening in regards to my foreign status...they also filed it wrong (as I said) and I had to pay back a LARGE sum of money. So maybe it's time to change my scenery a bit.

Sincerely, thanks for getting me started in the right direction. This entire situation is super overwhelming, but this thread and discussion with you has been very helpful.

[TakeruK]

Good luck!! I don't envy your situation, I'm currently planning for a move back to Canada and already the paperwork is piling up!

[MackPeters]

33 minutes ago, TakeruK said:

Good luck!! I don't envy your situation, I'm currently planning for a move back to Canada and already the paperwork is piling up!

Man, who would think that a move back to your country of residence would be so hard! Ugh!

Actually I thought of one more thing, if you have any insight: on the Canadian tax forms, it asks about the amount of taxable income made for the year. In regards to making money in US dollars, is there some conversion that is needed? Or do we just use the amount of US dollars? This is just a shot in the dark hoping that you may have experience with this...

[TakeruK]

Just now, MackPeters said:

Man, who would think that a move back to your country of residence would be so hard! Ugh!

Actually I thought of one more thing, if you have any insight: on the Canadian tax forms, it asks about the amount of taxable income made for the year. In regards to making money in US dollars, is there some conversion that is needed? Or do we just use the amount of US dollars? This is just a shot in the dark hoping that you may have experience with this...

Yes, you must convert the dollar amount. You have two options: For every paycheque, look up the conversion on that day and provide it. This is not a good idea unless you were paid a lump sum once or twice. The better way is to use the official averaged conversion rate and apply that rate. More information and links to these rates here: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/104/frgn-eng.html

[MackPeters]

15 minutes ago, TakeruK said:

Yes, you must convert the dollar amount. You have two options: For every paycheque, look up the conversion on that day and provide it. This is not a good idea unless you were paid a lump sum once or twice. The better way is to use the official averaged conversion rate and apply that rate. More information and links to these rates here: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/104/frgn-eng.html

Awesome! This was my main hindrance for filing a correct report for this year, solved. Thanks again! Hope your move goes successfully!

[Thu.berc]

Hi everyone!

I just phoned the CRA to ask some questions, and I actually got a reply that I wasn't expecting: I'm most likely considered a non-resident for tax purposes and therefore shouldn't file a return!

This came up because my first question was that I'm unsure if I'm an ordinary/factual resident, or a deemed resident. I told him that I'm living in the US completing a PhD and all of my income sources are US, and he said that 4+ years is not considered a temporary absence, and that I'm almost definitely a non-resident, period. He suggested that if I want an official ruling, I should file an NR73 and see what the response is, but he reiterated that there's no way I'm not a non-resident. He sounded pretty sure.

I then went and did some reading about it (see http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s5/f1/s5-f1-c1-eng.html ), and while it's complicated, it generally sounded from the wording there that at the end of the day I would be considered a non-resident, as my ties to Canada are only in the form of my parents who I visit once a year, and there's absolutely no certainty about whether or not I will return to Canada after my PhD.

So, this would suggest that for many other people in this thread they would also be non-residents and don't have to bother with this entire exercise?

But I read somewhere that even though I'm a non-resident, I can still get the tuition tax credits (and in particular won't have to pay taxes on this "scholarship income")...

[genderboi]

5 minutes ago, Thu.berc said:

Hi everyone!

I just phoned the CRA to ask some questions, and I actually got a reply that I wasn't expecting: I'm most likely considered a non-resident for tax purposes and therefore shouldn't file a return!

This came up because my first question was that I'm unsure if I'm an ordinary/factual resident, or a deemed resident. I told him that I'm living in the US completing a PhD and all of my income sources are US, and he said that 4+ years is not considered a temporary absence, and that I'm almost definitely a non-resident, period. He suggested that if I want an official ruling, I should file an NR73 and see what the response is, but he reiterated that there's no way I'm not a non-resident. He sounded pretty sure.

I then went and did some reading about it (see http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s5/f1/s5-f1-c1-eng.html ), and while it's complicated, it generally sounded from the wording there that at the end of the day I would be considered a non-resident, as my ties to Canada are only in the form of my parents who I visit once a year, and there's absolutely no certainty about whether or not I will return to Canada after my PhD.

So, this would suggest that for many other people in this thread they would also be non-residents and don't have to bother with this entire exercise?

But I read somewhere that even though I'm a non-resident, I can still get the tuition tax credits (and in particular won't have to pay taxes on this "scholarship income")...

Good to know! I'll still be filing every year for those tax credits, just in case I do decide to return after the PhD. 

[TakeruK]

@Thu.berc: I didn't know that you can file for tuition credits if you are a non-resident. But if you are non-resident then you definitely don't pay taxes on non-Canadian income, only residents of Canada are taxed on worldwide income.

Being a student could qualify you for factual residency (see https://travel.gc.ca/travelling/living-abroad/taxation). As you said, it does depend on other factors. In my case, I was considered a resident but I have stronger ties** to Canada than what you have listed here. Another example of how taxes are a very much case-by-case thing and a reminder that everyone should seek advice for their own case after reading the general advice here  (Note: Just wondering, did you tell the CRA agent specifically that you are a student attending school, since if you just say you are "seeking a PhD" and "working" in the US, it might not be clear that you are on a temporary student visa).

** for example: maintained Canadian bank accounts, kept most of my savings in Canadian accounts, maintain membership in Canadian professional societies, and intent to return to Canada (on my J-1 status with Canadian government funding, I am required to return to Canada).

As I said above, my spouse actually files as a non-resident, so our taxes are always a little complicated/fun since we still file together as a household but one of us is a resident and one isn't! I got official confirmation from CRA that I should file as a resident because of my student status but my spouse (who have the same ties to Canada as me) should not because my spouse is living and working in the US, not being a student (like your CRA agent said, working 4+ years outside of the US is not "temporary").

[Thu.berc]

For clarity, I made sure to tell the CRA agent that I am currently in the US solely for the purpose of attending school and the only "work" I'm doing is GTA and GRA as a part of my PhD program.

But indeed, I think my residential ties to Canada are much weaker than TakeruK's: I'm on an F-1 and have no obligation nor direct plans to return to Canada after my PhD (I'll go wherever I get the best job/postdoc offer, which may or may not be in Canada). I do still have a Canadian bank account and a few credit cards, but I very rarely use them. I have no membership in any Canadian professional organizations/societies. The only personal belongings I have in the country are a few small personal effects from childhood that are in storage in my parents basement.

As for whether or not one can file for tuition credits as a non-resident: I read this somewhere on the internet, but that of course doesn't make it true  I'm going to look into it more thoroughly, but yeah it would actually make more sense if I wasn't able to. Will report back if I find anything conclusive.

[spicytunaroll]

I am so confused guys. I hold a Canadian passport, and am going to be in the states for at least 6+ years. I just filed my 1042 here in the states. What should I do with my Canadian stuff? I too have a Canadian bank account and a credit card but that's pretty much it. What should I do?

[TakeruK]

9 hours ago, spicytunaroll said:

I am so confused guys. I hold a Canadian passport, and am going to be in the states for at least 6+ years. I just filed my 1042 here in the states. What should I do with my Canadian stuff? I too have a Canadian bank account and a credit card but that's pretty much it. What should I do?

If you are not sure, contact the CRA like others here and/or fill out the NR73 form (http://www.cra-arc.gc.ca/E/pbg/tf/nr73/README.html). You might not a non-resident for taxes in Canada, however, if this is your first year in the US, then we are talking about the 2016 tax year. Did you earn Canadian income in 2016? I think you will definitely have to file taxes in Canada this year if it's your first year in the US. For future years, if you don't have residency then you may not need to file anything. Note that when you file from outside of Canada, you must mail in your form, so do it soon! Also, you must include a copy of a the US tax return, so make a copy of everything too.

[MathCat]

This is my first year filing as a factual resident (long story there, but suffice to say I have to correct my 2015 tax return...), and I'm uncertain on how to answer the question for my province of residence on Dec. 31, 2016. I guess I am a factual resident due to my ties to BC, and that is where my permanent Canadian address (i.e. my parents' house) is. But it is not where *I* lived on Dec. 31. So do I answer British Columbia? I'm using UFile online right now. The options are: say BC, or choose one of 'deemed resident' or 'non-resident', neither of which applies to me, I believe.

edit: nevermind, I found the answer: I do indeed say BC. Found here: http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/tmprry-eng.html "For each tax year that you're a factual resident of Canada for tax purposes, use the General Income Tax package for the province or territory where you keep residential ties. Generally, this is the province or territory where you lived before you left Canada."

Edited April 21, 2017 by MathCat

[TakeruK]

@MathCat: Yep, I was going to say the same thing as what you eventually found. You can tell UFile an international mailing address but still file BC tax forms

I'm so looking forward to moving back to BC in a few months and then the 2017 tax year will be the last time I have to deal with this headache of filing in two countries!!

[MathCat]

It's me again, with yet another tax return mistake! Well, I'm hoping it is a mistake. For the 2016 taxes, I had income only from the US: TA wages (say $X) on a W-2, and fellowship income (say $Y) on a 1042-S. A tax accountant in the family (informally) helped me with my Canadian tax return, but honestly I am not that confident in some/much of what they did. The result was that on my T1, in box 104 'other employment income', the amount entered was $(X+Y). I believe this is a mistake - after all, my fellowship income is not employment income! This definitely seems to be what earlier posts are explaining. As entered, I would have owed a significant amount to CRA (I had a large fellowship amount that year).

I did not include my tuition waiver as income, but I did file the TL11A for tuition credits. I think this was also a mistake - CRA has contacted me asking for justification for this, and from what they ask for it seems that I should have included it in my income as well, which makes sense in retrospect. Should I simply have added this amount to my income and included the TL11A? No other forms required (e.g. showing the tuition waiver as income in some way - I do get billed for it and then it gets paid by the dept, but it doesn't appear on any tax forms)?

[TakeruK]

13 hours ago, MathCat said:

It's me again, with yet another tax return mistake! Well, I'm hoping it is a mistake. For the 2016 taxes, I had income only from the US: TA wages (say $X) on a W-2, and fellowship income (say $Y) on a 1042-S. A tax accountant in the family (informally) helped me with my Canadian tax return, but honestly I am not that confident in some/much of what they did. The result was that on my T1, in box 104 'other employment income', the amount entered was $(X+Y). I believe this is a mistake - after all, my fellowship income is not employment income! This definitely seems to be what earlier posts are explaining. As entered, I would have owed a significant amount to CRA (I had a large fellowship amount that year).

I did not include my tuition waiver as income, but I did file the TL11A for tuition credits. I think this was also a mistake - CRA has contacted me asking for justification for this, and from what they ask for it seems that I should have included it in my income as well, which makes sense in retrospect. Should I simply have added this amount to my income and included the TL11A? No other forms required (e.g. showing the tuition waiver as income in some way - I do get billed for it and then it gets paid by the dept, but it doesn't appear on any tax forms)?

Is this a Canadian fellowship or a US fellowship? If it's Canadian, then you should have received a T4A. When I had a Canadian fellowship (NSERC), they issued me a T4A. You just have to ensure you code it with the correct income code appearing on your T4A (that tax form is used for a lot of different things).

If you are not using tax software, I highly recommend that you do so. The software will determine if your T4A income needs to be included as taxable income based on its source (i.e. the income code). My friends and I have found that many tax accountants in both Canada and the USA are actually quite unfamiliar with the complicated taxes of international students and academic income, so I would trust software to know all of the ins and outs. 

If this is an American fellowship, then that would be different. I never had employment income while in the US, it was all income specifically marked with the "no services provided" letter. When I called the CRA hotline to ask about whether I needed to provide this on my Box 104, they said that I should not include it if the income was specifically for my education only. By extension, I also did not include my tuition waiver as income. Therefore, I do not think you should include $Y in your Box 104.

In your case, since you specifically have employment income, your situation may be different for the $X.

However, I am still surprised to hear that you would owe taxes in Canada despite already paying taxes in the USA. Did you also claim the Foreign Tax Credit benefit? It prevents you from being double taxed.

For the TL11A, I also got that request the first time I made the claim. I called the CRA to ask what they needed and they just wanted a physical copy of the TL11A form with the school official's signature on it to verify my student status and the amount paid. Since then, I always include the hard copy with my filing and I've never been asked about it again.

[MathCat]

1 hour ago, TakeruK said:

Is this a Canadian fellowship or a US fellowship? If it's Canadian, then you should have received a T4A. When I had a Canadian fellowship (NSERC), they issued me a T4A. You just have to ensure you code it with the correct income code appearing on your T4A (that tax form is used for a lot of different things).

If you are not using tax software, I highly recommend that you do so. The software will determine if your T4A income needs to be included as taxable income based on its source (i.e. the income code). My friends and I have found that many tax accountants in both Canada and the USA are actually quite unfamiliar with the complicated taxes of international students and academic income, so I would trust software to know all of the ins and outs. 

If this is an American fellowship, then that would be different. I never had employment income while in the US, it was all income specifically marked with the "no services provided" letter. When I called the CRA hotline to ask about whether I needed to provide this on my Box 104, they said that I should not include it if the income was specifically for my education only. By extension, I also did not include my tuition waiver as income. Therefore, I do not think you should include $Y in your Box 104.

In your case, since you specifically have employment income, your situation may be different for the $X.

However, I am still surprised to hear that you would owe taxes in Canada despite already paying taxes in the USA. Did you also claim the Foreign Tax Credit benefit? It prevents you from being double taxed.

For the TL11A, I also got that request the first time I made the claim. I called the CRA to ask what they needed and they just wanted a physical copy of the TL11A form with the school official's signature on it to verify my student status and the amount paid. Since then, I always include the hard copy with my filing and I've never been asked about it again.

It is US income, I had no income from Canada for 2016. Specifically, it's part of my stipend from the university which is classified as fellowship income (basically, I TAed at half the usual amount, and the 'fellowship' amount included a top up so I was paid the normal amount for a full time TA). I will call the CRA. 

[Shah Az]

I found this thread very helpful but I got some questions.

1- I am Canadian, got graduate (Masters) scholarship (Fulbright) in US School  2014-16. I recieved monthly stipend and tution waiver (actually paid by US Govt under Fulbright GRANT). However, I reported only stipend as income in US (as per my Tax consultant Advice). The stipend I recieved were already taxed and my tax was filed in US by the Grant Office on my behalf. When I reported my income to CRA, I was charged tax payable (CAD 900 in 2014, CAD 1500 in 2015) which I paid and for 2016 I am expecting similar amount to be paid. 

I don't understand, when I was taxed in US, why do I need to pay taxes in Canada. i have 2 kids (under 6) and my wife is household. Any advice ?

 

Regards

Shah