green card holder studying in Canada: taxation

[babaluma]

Hello,

I have a complicated tax situation, and I hope somebody can point me to the right direction. I am a GC holder since 2005 and have been studying in Canada for the last 1.5 years on a student visa. I have a reentry permit to US and have been visiting US regularly.
I am also self-employed and am doing some freelance work remotely for a US company. I have been corresponding with them using my US mailing address. I obviously don't physically live at that address and I don't have any identifying ID from the state, either (driver's license, etc.), at this point.
I have been filling out tax forms, and I am concerned about whether I need to file for state tax return for the state I have a mailing address at. Does green card require a state residency for taxation purposes?

thanks

[nelsona]

GC does not require state residency for tax purposes.

[Jackolantern]

As a green card holder you need to be legally a resident of a US state or US territory (e.g. Puerto Rico) even if you are physically outside the US, and you need to pay taxes to whichever state or territory you are a resident of (if that state has an income tax).

I obviously don't physically live at that address and I don't have any identifying ID from the state, either (driver's license, etc.), at this point.

Lacking those things could result in loss of your green card after such extended travel, even though you have a reentry permit. But this is more likely to be a problem with citizenship than maintaining your green card.

[nelsona]

Taxation is governed by source of income, physical residency and tax treaties. There is no need for a GC holder living in canada, with a re-entry permit, for example, to continue to pay any state tax whatsoever.

Any income he would have would neither be state-sourced, nor would he need to maintain the ties requisite to allow the state to treat him as a resident for tax purposes. His re-entry permit takes care of the iimigration angle (as would other circumstances, like working for a US firm abroad, accompanying US citizen living abroad, etc). None of these situations would require domiclie in any particular state, and thus would not give rise to any state tax obligation.

[babaluma]

Thanks. So, as long as I pay federal tax, it should not be a problem that I am using a US mailing address, because I have a re-entry permit, which pretty much establishes that I live temporarily outside US. Right?

[Jackolantern]

Originally Posted by nelsona

Taxation is governed by source of income, physical residency and tax treaties. There is no need for a GC holder living in canada, with a re-entry permit, for example, to continue to pay any state tax whatsoever.

That depends on the rules of the state. Some states require their residents to pay taxes to be paid on worldwide income (after canceling out applicable deductions/credits/exemptions for taxes paid to other states or countries).

Perhaps the state cannot compel you to pay taxes to them when you're outside the US, but immigration authorities questioning your ties to the US will expect you to be paying taxes to the state you claim to be a resident of, if the given state requires taxes on worldwide income. And your other documents (e.g. DL, residential address) should be consistent with being a resident of the state you have claimed.

His re-entry permit takes care of the iimigration angle (as would other circumstances, like working for a US firm abroad, accompanying US citizen living abroad, etc).

No. Even with a reentry permit, the courts have ruled that demonstrating ties to the US is required.
http://www.murthy.com/news/ukreeperm.html

The OP should consult a tax accountant who specializes in Canada-USA combined taxation. Canada probably will want some of that tax money as well, with the work being done in Canada.

[babaluma]

Thanks, jackolantern. I must probably emphasize that I do most of the things in that URL to maintain ties with US, besides the re-entry permit: filing annual tax returns as a permanent resident; having an address in the U.S., even if the address may be that of a friend or relative; maintaining a valid driver’s license; maintaining bank account/s; holding credit card and other accounts; and keeping some personal belongings in the U.S., etc.

[Jackolantern]

Originally Posted by babaluma

Thanks, jackolantern. I must probably emphasize that I do most of the things in that URL to maintain ties with US, besides the re-entry permit: filing annual tax returns as a permanent resident; having an address in the U.S., even if the address may be that of a friend or relative; maintaining a valid driver’s license;

In your original post, you said you don't have a driver's license from that state. Is it that your license is in one state, but your residential address (the friend's place) is in another? If you have different ties scattered all over different parts of the US, it becomes less convincing than if your ties are concentrated in one place.

[nelsona]

That depends on the rules of the state. Some states require their residents to pay taxes to be paid on worldwide income (after canceling out applicable deductions/credits/exemptions for taxes paid to other states or countries).

That's the point: he is not resident of any state. Or at least that is what he came to the table with.

No. Even with a reentry permit, the courts have ruled that demonstrating ties to the US is required.
http://www.murthy.com/news/ukreeperm.html

good point. This was, however a tax question. But, ince a friends adress is sufficient, the I suggest a friend in any of the half-dozen states that have no income tax. Problem solved. Or, since having US property seems sufficient, buy a piece of land. This wouldn't make you a tax resident of any state that I know of, but would seem to satisfy the 'ties' issue.

Canada probably will want some of that tax money as well, with the work being done in Canada.

As I am such an expert, I would say that even though his student status makes him non-resident of canada doing the work in Canada would make it taxable there -- unless he can show that the work is being done by contract (non-employee) and that it is not thru a fixed-base in canada (ie, an office).

forums.serbinski.com is a much better place to discuss these matters.

[Jackolantern]

Originally Posted by nelsona

That's the point: he is not resident of any state. Or at least that is what he came to the table with.

Either way it's a problem. If he is a resident of a state, he needs to pay the state tax (if they have one). If he is not a resident of any state, that creates potential immigration problems either at the port of entry or applying for citizenship.

[nelsona]

Yup. best solution is to use a Florida friend's address.

Although, I can't believe a reputable firm like murthty would publicly suggest a false address.

[Jackolantern]

Murthy didn't suggest a false address. A friend's or relative's address is not a false address if it is a place where you stay when you are in the US. It's only a false address if the individual makes it one by not going there.

[nelsona]

A friend's or relative's address is not a false address

Of course it is. Otherwise, should one give the address of the Holiday Inn? C'mon now.

No wonder there are so any illegals, with advice like that from an immig lawyer.

[Jackolantern]

I see you find it convenient to change the meaning of my sentence by cutting off the last part of it.

People can and do stay at a friend or relative's house and that is their primary place of residence in the US. And there are other people who have that address as a facade. There is a difference.