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prachinshah
New Member

Do I file 1040 or 1040NR if i have been living in Canada for 2018 as a Permanent Resident and working for the US employer on H-1B Visa?

I moved to Canada in Oct 2017 as a Permanent Resident of Canada. Since then, I have been living in Canada and working from home (Canada) for my US employer. I hold H-1B Visa. I have not been in the US in 2018. I do not meet Substantial presence test. My employer just filed my I-140 for lawful permanent residency last week. Am I considered a non-resident alien for tax purposes? Do I file 1040NR form?
4 Replies
pk
Level 13
Level 13

Do I file 1040 or 1040NR if i have been living in Canada for 2018 as a Permanent Resident and working for the US employer on H-1B Visa?

Based on your post --(1) while your visa H-1B exists, because you have left the USA for at least a year -- it is no longer valid -- thus for 2018 you would be Non-Resident Alien. (2) if you are permanent resident of Canada, living in Canada ,  working from home in Canada , your income ( even if paid by an US entity ) does not come under US taxation.  Absent some income from US sources  ( like rental property, business income, investment income, capital gains etc. ), there is no need for you to file a US return.

What am I missing here?


Namaste ji

prachinshah1
New Member

Do I file 1040 or 1040NR if i have been living in Canada for 2018 as a Permanent Resident and working for the US employer on H-1B Visa?

Thanks for ur response. I am not a US citizen but a H-1 B visa holder. On this basis, the company is deducting fed and Fica taxes. Otherwise, how would company treat me and do my payroll?

my understanding and IRS advised me these very vaguely back in 2017 -

Under NAFTA, Canada will get a credit of my taxes once i file with IRS and CRA.
prachinshah1
New Member

Do I file 1040 or 1040NR if i have been living in Canada for 2018 as a Permanent Resident and working for the US employer on H-1B Visa?

Since i am non-resident alien as i do not meet GC test or SP test, i am not sure how will i handle my taxes. Please advise.
pk
Level 13
Level 13

Do I file 1040 or 1040NR if i have been living in Canada for 2018 as a Permanent Resident and working for the US employer on H-1B Visa?

Let us go back a little --- when did you enter USA with H-1B?
My understanding would be that a Non-Resident Alien, on leaving USA, is effectively surrendering the visa and therefore not any longer valid. Also the income is taxed  based on residence i.e. Canada will tax all incomes based on whwre the work is done i.e. irrespective of the ultimate source of income, Canada will tax you on your world income -- the fact that it is coming from a US source is not important. Therefore I am not sure why you are choosing to file a USA 1040/1040-NR because  from US perspective active income ( wages )   must be for work done in the USA --- if an USA company has a remote worker  ( a Non-Resident Alien ) in South Africa -- he/she has no USA sourced / connected  income in the USA and tgherefore does not pay any US taxes.
Also for tax purposes it is the  Tax treaty  between  US and Canada that is in force  and generally not NAFTA/USAMC treaty.
Suggest you consult a Canadian Tax professional   

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