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Should TN Visa Holders in the United States File Form 1040 or 1040NR?

Author: Brad Howland
First Posted: Feb. 22, 2011

TN status is a non-immigrant visa category that permits Canadian and Mexican citizens in certain occupations to live and work in the United States. The fact that it is a temporary visa allowing for long-term residency can make it difficult to decide which U.S. tax form to file.

TN status is initially granted for only three years, but it can be extended indefinitely (if allowed) in three-year periods. Wikipedia reports that there are Canadians who have been living in the U.S. under this "temporary" visa status for more than 10 years.

Many Canadian taxpayers turn to the Substantial Presence Test in IRS Publication 519, take a quick look at the chart, and decide they can file as U.S. Resident Aliens based on the number of days they have been present in the United States. They miss the small print just after the chart that says "In some circumstances you may still be considered a nonresident alien under an income tax treaty between the U.S. and your country. Check the provisions of the treaty carefully."

The terms of the Canada/United States tax treaty can overrule the Substantial Presence Test. It is therefore important to consider several things when deciding whether to file Form 1040 as a Resident Alien or 1040NR as a Non-resident Alien:

A good tax preparer will consider all of the above factors before deciding which U.S. tax return to file. Get advice from an experienced cross-border preparer if you aren't sure what to do.

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