Income Tax in USA

[firecramp]

Does anyone know if you need to file a USA income tax return if you are a Canadian student on a full ride at an American university? My daughter has an F-1 student visa and has been given a 1042-S Foreign Person's U.S. Source Income Subject to Withholding form this year. She didn't get this form last year. She hasn't worked or earned income in the U.S. Thanks in advance!

[spencer3]

never knew you had a daughter... interesting

[cda]

Apr 13, 2010 17:03:28 GMT -5 spencer3 said:

never knew you had a daughter... interesting

Whoa

[Linc]

Did she live on campus last year and off this year??

From what I remember, I got the 1042-S the year I moved off campus. The room and board was given to me in a lump sum cheque for the semester; so it was considered income. Yes, you should file. I got help from the International student office the first year and did it on my own after that. I normally ended up getting money back...

[BeachBoy]

You do not need to file a U.S. tax return. The only time you would want to is if you had to pay residence tax. Since Canada has a treaty with the States you would get this refunded by filing a tax return. If you do this, you need to apply for a U.S. tax number first.
You can use the tuition paid (even though you didn't pay it) on your Canadian tax return.

[SI]

Get some advice from other than on a message board for crying out loud. Many Canadians have to file US returns whether they pay "residence tax" or not. Many long term vacationers and I believe students have to file Forms 8840 or 8843 for example:

www.irs.gov/pub/irs-pdf/f8843.pdf

[firecramp]

She lives on campus. She's the first Canadian recruited at this school and the International student office is of no assistance. She just got the tax form today and I think the deadline to file may be April 15th. So, yes, I'll be getting professional tax advice, but sometimes the best advice comes from those who have been there and done that. Thanks for the responses.

[SI]

Certain non residents can get an extension to 15/06-not sure if that would apply in this case.

[distancechick]

Yes, she does, and No, Canada does NOT have a tax treaty with the US for this purpose.

Im in the same situation right now (second year though). I've filed a tax return both years.

[Linc]

Yes, they DO have a tax treaty. It's up to 10,000 dollars Canadian. I remember this because I had to keep my summer earnings in the U.S. under $2500, so that I would stay under the limit after scholarship money.

[SI]

There is a treaty. What you are arguing about is what the provisions of that treaty are and what is exempt and not exempt. Small point-any exemptions would be in US dollars. Go nuts:

www.irs.gov/pub/irs-trty/canada.pdf

One should also keep in mind that just because something is exempt in the US does not mean that it is exempt in Canada. The provisions of the treaty, by definition, mean that you are a Canadian resident and have an obligation to file a Canadian return and pay tax on your worldwide income. Even if you do creep up over the 10k and there is resultant US tax, there would be foreign tax credit provisions applicable when you file your Canadian return so the tax wouldn't necessarily be lost unless your income is too low.

Depending on the particular arrangement with the US school in question, you may need the institution to fill out this form in order to prepare your Canadian return:

www.cra-arc.gc.ca/E/pbg/tf/tl11a/tl11a-09e.pdf

[distancechick]

Ok, treaty or not, if she received the 1042-S and it indicates that there was tax withheld, she needs to file a tax return.

The way it works for me is that tuition is payed direct to the university and isn't taxed, but my board/meals/monthly stipend are payed via check to me and are taxed at 14%. These are the only amounts that show up on my 1042.

[SI]

I am not disagreeing that a return has to be filed(or should be filed-two different questions, really). I am just pointing out that the question is a little more complicated than the original one posed particularly when Canuck filing obligations are thrown into the mix which was why my first post said to get some advice.