Am I a non-resident alien if I only have US clients?
Having American clients does not make you a resident of the United States. The classification turns on citizenship and on two residence tests, being the green card and the presence test measured on days, not on where your customers are. So a person in Canada invoicing American customers is ordinarily a non-resident alien. What having those clients does change is whether any of your income is US-source or connected with a US business, which is the separate question that decides whether you owe American tax and whether your payers must withhold. Two people can share the same classification and have entirely different filing obligations, because the classification sets the regime and the source of income sets the bill.
Why did my US client withhold tax on my invoice?
Because a payer making certain payments to a non-resident alien must withhold and remit unless it holds documentation supporting a lower rate or none at all. Withholding is generally applied to the gross payment rather than to a profit figure, so it can exceed the tax actually due on the same income, sometimes by a wide margin where your costs are real. The remedy is documentation before payment and a return afterwards. Giving the payer the right certification at the outset can reduce or remove the withholding where a treaty allows it. Where tax has already been taken, the way to recover the excess is to file the American return for the year and claim it back.
Do I have to file a US return if tax was withheld?
Often yes, and frequently to your advantage. Withholding is a collection mechanism, not a settlement. For some categories it is designed to approximate the final tax; for others it simply sits on the gross amount until a return works out what was really owed. Where your deductible costs are substantial, or a treaty caps the rate below what was taken, the return is how the difference comes back. There is a defensive reason as well. A period in which no return was filed does not start the clock the authority works to, so an unfiled year can stay open to enquiry far longer than a filed one, even where nothing was owing.
Does my US rental property make me a US taxpayer?
It makes you a person with US-source income, which is not quite the same thing. A non-resident alien holding American property is taxed there on what the property produces and on its eventual sale, while remaining a non-resident for every other purpose. The mechanics are where the money goes. Rent paid to a non-resident is exposed to withholding on the gross rent, which ignores mortgage interest, property taxes, insurance, management and depreciation entirely. Where an election is available to be taxed on the net rental result instead, it is made with documentation and then supported by filing every year. Doing nothing usually means being taxed on a figure that bears no relation to your profit.
Can I claim treaty benefits as a non-resident alien?
Yes, where a treaty applies both to you and to the income in question, but a benefit is claimed rather than granted. In practice it operates in two places: at the payer, through certification that tells them which rate to apply, and on the return, where the position is stated and the facts behind it recorded. A treaty can reduce a withholding rate, allocate a category of income to one country, or decide residence where both countries claim you. What it cannot do is fix a claim made late for a payment already remitted, without a filing to recover it. So the order of work matters. Certify first, file second, and keep the evidence of why you qualify.
What changes if I stop being a non-resident alien?
The reach of the American system changes, not merely the rate. A non-resident alien answers to the United States for US-source income and for income connected with a US business. Someone classified as a resident answers for worldwide income, with information reporting on accounts and assets held outside the country attached to it. That is a step change, and it can be triggered by a change of immigration status or simply by a pattern of days. The year in which it happens is the awkward one, because part of it may fall under each regime and income has to be allocated between them. Anyone whose travel or status is shifting should test the classification before the year ends.
What is a section 217 return and should I file one?
An election available to a non-resident receiving certain Canadian pension and benefit payments. Normally those payments suffer flat withholding and that is the end of it. Under the election you file a Canadian return and are taxed on that income at graduated rates as though resident, which produces a refund of part of the withholding where the graduated result is lower — and no benefit where it is not. It is worth modelling before electing, because the choice is annual. See the section 217 return.
What happens if two countries both say I am resident?
The treaty tie-breaker resolves it to one residence, applied in order: where your permanent home is, then your centre of vital interests, then your habitual abode, then nationality, with a competent-authority referral if all of those fail. It is an evidence exercise rather than an election — you document the home and the life around it. Getting a single residence settled is what makes every other position in both returns consistent. See the residency tie-breaker.
