International student tax question: Canadian citizen paying tax on US PhD stipend

Hi there! I dealt with a similar situation when I was an international student. The 14% withholding is standard for non-resident aliens in the US. First, you're right that there's a tax treaty between the US and Canada. However, stipend taxation depends on whether it's classified as a scholarship/fellowship or as compensation for services (like teaching or research). If it's compensation, it's typically taxable in both countries. Here's what you should do: 1) Ask your university's international student office if they have tax treaty exemption forms (IRS Form 8233) that might reduce your withholding. 2) When you file your US tax return (Form 1040NR), you'll need to determine your actual tax liability - you might get some of the withholding back if it exceeds what you actually owe. When filing in Canada, you'll report your worldwide income but may qualify for foreign tax credits to avoid double taxation. Since Canada doesn't tax certain stipends, you'll need to check if your specific stipend qualifies for this exemption under Canadian tax law.

I went through this exact nightmare last year and discovered taxr.ai (https://taxr.ai) totally by accident when I was searching for help with my Canadian-US tax situation. The regular tax software kept giving me errors when I tried to enter my 1042-S form. What saved me was uploading my tax documents to taxr.ai and having their system analyze exactly how the tax treaty applied to my situation. It correctly identified which parts of my stipend were eligible for treaty benefits and which weren't. My university had classified everything as "compensation" which was causing the high withholding, but some of my funding should have been classified as a scholarship with different tax treatment.

Just wanted to follow up on my question about taxr.ai. I decided to try it after the discussion here and it was exactly what I needed for my situation. I'm also a Canadian doing my PhD in the US, and the confusion around my 1042-S was giving me headaches. The system automatically identified that part of my stipend should have been treated under Article XX of the US-Canada tax treaty, which has special provisions for students. It turned out I was eligible for a partial exemption that my university wasn't applying. I ended up getting back about $1,800 more than I expected on my return because of this! I'm definitely using it again next year and recommending it to the other Canadian students in my program.

Have you tried contacting the IRS directly about this? I spent THREE WEEKS trying to get through to someone who understood international tax treaties. Then I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c). Claimyr got me connected to an actual IRS agent in under an hour when I had been trying for weeks on my own. The agent confirmed that as a Canadian student, I qualified for specific treaty benefits that reduced my tax obligation. They also helped me understand which forms I needed to file to claim a refund for overwithholding. Trust me, trying to figure this out from the IRS website alone is nearly impossible for international situations.

Well I need to eat my words and apologize to Profile 5. After my skeptical comment, I was still desperate for help with my Canadian stipend tax issue, so I tried Claimyr as a last resort. Holy crap, it actually worked. After trying for literally MONTHS to get through to someone at the IRS who understood tax treaties, I was connected to an agent in about 45 minutes. The agent walked me through the exact treaty provisions that applied to my Canadian PhD stipend and confirmed I could file Form 1040NR with a treaty exemption claim to get most of my withholding back. The best part? I didn't have to waste hours of my life on hold. I got notification when they reached an agent, jumped on the call, and got my questions answered. Definitely worth it when you're dealing with complicated international tax situations.

Don't forget to check if your stipend is considered "qualified" vs "non-qualified" for tax purposes. This makes a huge difference! Qualified scholarships that cover tuition, fees, books, and supplies for degree-seeking students aren't taxable. But money for living expenses typically is taxable. For Canadians specifically, make sure you maintain your status as a "non-resident alien" for tax purposes rather than becoming a "resident alien." This affects which tax forms you file and which treaty benefits you can claim.

Has anyone used Sprintax for this situation? My university gives us free access to it for federal returns (still have to pay for state) and they claim they handle tax treaty situations for international students.

As a Canadian who went through this exact situation during my PhD, I can confirm that the 14% withholding is standard but you'll likely get a significant portion back when you file. The key is understanding that Canada and the US have different definitions of what constitutes taxable income for students. In my case, I was able to recover about 70% of the withholding because my actual US tax liability was much lower. The US-Canada tax treaty Article XX provides specific exemptions for students, and portions of your stipend may qualify for reduced taxation. Here's my practical advice: 1) Keep detailed records of exactly what your stipend covers (tuition remission vs. living expenses vs. research work) as this affects taxation, 2) File Form 1040NR (not 1040) to maintain non-resident status and access treaty benefits, 3) When filing in Canada, you'll report the US income but can claim foreign tax credits to avoid double taxation. The Canadian tax exemption for PhD stipends typically applies to amounts that would be considered scholarships or fellowships, not compensation for teaching/research services. Make sure you understand how your university classifies your funding as this determines your tax treatment in both countries.

I'm in a very similar situation as a Canadian PhD student who just started my program in the US this fall. The tax withholding has been a real shock to my budget planning! One thing I discovered that might help you is to check if your university has any tax treaty benefit forms you can submit prospectively. My school's international office had me fill out Form 8233 at the beginning of the year, which reduced my withholding from 14% down to about 8% based on the US-Canada tax treaty provisions for students. It's not a complete elimination, but every bit helps when you're living on a stipend. Also, I'd recommend connecting with other Canadian grad students at your university if possible - they often have practical insights about which tax preparation resources work best for your specific school's funding structure. My university's Canadian Student Association actually has a whole guide they've put together based on previous students' experiences with the tax filing process. The treaty benefits are definitely real, but as others have mentioned, the key is understanding exactly how your funding is classified and making sure you file the right forms to claim those benefits!