Income and tax returns - United States

If you work in the U.S. for your co-op work terms and you are not considered a U.S. resident for U.S. tax purposes, you may be required to file a U.S. tax return and pay taxes on your U.S. sources of income. You would need to apply for an Individual Taxpayer Identification Number or Social Security Number in order to file your U.S. tax return. The primary form required is Form 1040NR - U.S. Nonresident Alien Income Tax Return, on which you will report your U.S. wages and salaries from Form W-2 received from your employer. Your U.S. tax return and payments are due April 15 of the following year (can be electronically or paper filed). The penalty for late filing is usually 5% of the amount due for each month your return is late.

As a Canadian resident, you will also be required to file a Canadian tax return. The income from your U.S. co-op work term will also be included on the Canadian return. Foreign tax credits can be claimed on the Canadian return for the U.S. tax paid to ensure the income isn’t taxed twice.

The above assumes that you are a non-resident of the U.S. It is important to consider your residency status in the U.S. If you are considered to meet a “substantial presence test” which is based on the number of days you are present in the country in the past three years you are treated as a U.S. resident under U.S. domestic law. In such a case, additional filings will be required of a Canadian resident. If you have a green card, again you are considered a U.S. resident under U.S. domestic law. In either situation, you may want to consult a U.S. tax advisor.

- Laura, MAcc alum