TN Visa Taxes and Your U.S. Tax Return

The TN visa provides a path for qualified Canadian and Mexican citizens to work in the United States. This non-immigrant status, established under the United States-Mexico-Canada Agreement (USMCA), allows professionals in specific fields to accept pre-arranged, temporary job offers. Accepting employment in the U.S. establishes tax responsibilities, and the U.S. tax system has specific rules for foreign nationals that determine how your presence and income are treated.

Determining Your U.S. Tax Residency Status

Your tax obligations in the United States depend on your tax residency status, which is distinct from your immigration status. For tax purposes, you will be classified as either a nonresident alien or a resident alien. This is determined by the Internal Revenue Service (IRS) through the Substantial Presence Test (SPT), which measures the number of days you are physically present in the U.S. over a three-year period.

To meet the Substantial Presence Test, you must be physically present in the U.S. for at least 31 days during the current year and a total of 183 days during a three-year period. The 183-day total is calculated by adding all days from the current year, one-third of the days from the prior year, and one-sixth of the days from the year before that. For example, if you were in the U.S. for 120 days in each of the last three years, your count would be 120 + (1/3 120) + (1/6 120), for a total of 180 days, meaning you would not meet the test.

Even if you meet the 183-day threshold, you may still be treated as a nonresident alien by qualifying for the Closer Connection Exception. This exception is relevant for TN visa holders who maintain ties to their home country. To claim this, you must be present in the U.S. for fewer than 183 days in the current year, maintain a tax home in your country of origin, and demonstrate a closer connection to that country than to the U.S.

Proving a closer connection involves filing Form 8840, Closer Connection Exception Statement for Aliens, with the IRS. This form requires information that substantiates your ties to Canada or Mexico. Factors include:

• The location of your permanent home
• The location of your family
• The location of your personal belongings, such as cars and furniture
• Where you conduct your banking
• Where you hold social, cultural, or professional memberships

U.S. Federal Tax Obligations

Your tax residency status dictates how you are taxed by the federal government. If you are classified as a resident alien, the U.S. taxes you on your worldwide income, meaning you must report all income from any source, inside or outside the U.S.

Conversely, if you are a nonresident alien, your U.S. tax obligation is limited to your U.S.-source income. For a TN visa holder, this is primarily the salary earned from your U.S. employer.

A significant area of federal tax for TN visa holders involves FICA taxes, which fund Social Security and Medicare. TN visa holders are subject to FICA taxes on their U.S. wages, which are withheld from paychecks. The Social Security tax is 6.2% on wages up to an annual limit ($176,100 for 2025), and the Medicare tax is 1.45% on all wages.

While certain non-immigrant visa categories, such as F-1 students, may be exempt from FICA, this exemption does not apply to TN visa professionals. Any potential exemption would more likely arise under a Totalization Agreement between the U.S. and your home country, which aims to prevent dual social security taxation. Claiming this benefit requires obtaining a certificate of coverage from your home country’s social security agency to present to your U.S. employer.

The Role of the U.S. Tax Treaty

The United States maintains tax treaties with both Canada and Mexico to prevent double taxation, which occurs when the same income is taxed by both your home country and the U.S. The primary mechanism for this is the Foreign Tax Credit. This provision allows you to claim a credit on your Canadian or Mexican tax return for the income taxes you have paid to the U.S. government.

The tax treaties also contain “tie-breaker rules” to resolve situations where a person might be considered a tax resident of both the U.S. and their home country simultaneously. These rules establish a hierarchy of tests to determine a single country of residence for tax purposes. The factors considered are:

• Where you have a permanent home available
• Where your center of economic and personal interests is located
• Your country of citizenship

State and Local Tax Considerations

Beyond federal obligations, TN visa holders must be aware of state and local taxes. Your federal tax residency status does not automatically determine your residency for state tax purposes. Each state has its own rules for defining a tax resident, often based on your domicile and the number of days you spend in the state.

If you live and work in a state with an income tax, you will be required to file a state income tax return. State tax laws can be complex, and the income subject to tax can vary. Some states may look to your federal adjusted gross income as a starting point, while others have their own definitions of taxable income.

Furthermore, your tax obligations may not end at the state level. Some jurisdictions have local income taxes imposed by cities, counties, or school districts. These taxes are assessed on the wages you earn within that locality. Your employer will usually handle the withholding for these taxes, but you are responsible for ensuring the correct amount is paid and for filing any required local tax returns.

Filing Your U.S. Tax Return

Filing your U.S. tax return requires gathering the correct documents and understanding the key forms. Your primary form will be either Form 1040 if you are a resident alien or Form 1040-NR if you are a nonresident alien. Other forms may be necessary depending on your circumstances. For instance, Form 8843 is used to explain why certain days of presence should not be counted for the Substantial Presence Test.

If you claim the Closer Connection Exception, you must attach Form 8840 to your tax return. To claim a benefit under a tax treaty, you may need to include Form 8833, Treaty-Based Return Position Disclosure. Each of these forms serves a distinct purpose in accurately reporting your tax situation to the IRS.

A common step for TN visa holders involves obtaining an Individual Taxpayer Identification Number (ITIN) for dependents, such as a spouse or children on a TD visa. If your dependents do not have and are not eligible for a Social Security Number (SSN), you must apply for an ITIN for them using Form W-7 if you intend to claim them for any tax benefits. This is typically filed along with your tax return.

The primary deadline for filing U.S. tax returns is April 15th of the year following the tax year. Nonresident aliens who do not have wages subject to U.S. withholding have a filing deadline of June 15th. An extension to file can be requested, which pushes the deadline to October 15th, but this is an extension to file, not an extension to pay any tax due.