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US CANADA US citizen living in Canada working on US real estate -

US / Canada Income Tax Help - CEN-TAPEDE centapede at lists.centa.com
Mon Jul 21 14:09:27 PDT 2008

Hello David,

Your advice on davidingram.net has been very helpful for us, as are also interested in purchasing property in States.  We are aware that Canadians wanting to use US real estate as rentals property are not allowed by laws to do any work on this property.

My father in-law is a US citizen, not a US resident.  We are Canadian residence  and citizens.
Is he able to do renovations on this property while he is staying in the US, as long as he doesn't exceed the 120 days there?

Would his citizenship also allow him to operate as manger of the unit to rent out property.

What would the implications be for him if any?

Thanks
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david ingram replies:
 
This came to a personal email that I do not usually answer anything on but I just bought another 1985 White Cadillac Eldorado Biarritz Convertible (I have three) and it is nicer than the other two.  And in two hours i am taking delivery of a 1980 500XT "thumper" motorcycle  so i am in a really good mood so here goes.
 
If your father in law is an American, he can do anything on the property. There is no 120 or any other day rule for a US citizen.  As a US citizen, he is responsible to file a US tax return every year as it is.  If he is not doing so, and has signing authority over a Canadian RRSP and other accounts in Canada (or France or Mexico) with over $10,000 in them at any time in the year, he is liable for a minimum fine of $10,000 and a maximum fine of $500,000 per account per year for every year he has not signed.
 
In addition, if he is a US citizen, there is a good chance that your husband is also a US citizen and could work as well.  I have put a chart at the end of this for you to figure it out.  (if your father in law is a US citizen who never lived in the US after age 14, your husband is not a US citizen, but if he came to Canada at 20 or older, your husband is a US citizen with a couple of variations if he was born after 1986 which is not likely.
 
If your husband is a US citizen, he can work on the property but also needs to file US tax returns.
 
To learn more about filing the US tax returns go to www.centa.com and read the Oct 1993 (dual citizenship) newsletter and the Oct 1995 (duties of a US citizen in Canada) which you will find in the top left hand box on the web site.
 
Then read the US / Canada Taxation link in the second box down on the right hand side.
 
QUESTION:

my mother was American born and raise and educated in the united states but married an American. she paid taxes for years at the consulate in Toronto Ontario and then became a Canadian citizen at which time her social security no. changed. i have the American one and am looking for a lawyer to find out about tax years that she paid but without the social security no. from the states i can not go to IRS. can YOU HELP ME AS SHE IS DECEASED NOW AND I WANT TO LIVE WITH HER RELATIVES WHO ARE IN THE STATES
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david ingram replies:

I think you mean she married a Canadian???  and I will proceed on that assumption.

She would also not have changed her social security number (SSN).  That is so rare that she would have had to be in the witness protection program or have had someone use her number in a STOLEN identity, MIXED identity or SCRAMBLED SSN manner.
Stolen is self evident.  A Mixed identity is when someone gets hold of a number (sometimes given to them by a payroll clerk for instance) and uses the number unwittingly until the situation is resolved. 
 
Scrambled is when two or more people are using the same number and the IRS can NOT determine who has owns the number.  In this case the IRS assigns IRSN (Internal Revenue Security Number) 's to everyone involved and there is a serious likelihood of lost benefits.

You can see a recent IRS warning on Identity theft involving Non-resident and foreign accounts (affects 10,000 or so of my readers) at: http://www.irs.gov/businesses/international/article/0,,id=121498,00.html

If you go to www.irs.gov and search on the key word identity theft  you will find much more.

If your mother was a US citizen and you are 52 or younger, you are likely a US citizen. 

I am assuming this because you said your mother was educated in the US.  If she came to Canada after age 19 and you are under 52, you are a US citizen.

The rules are that if you were born after Dec 24, 1952 and your mother lived in the US for  10 years, five of which were after age 14, you are a US citizen.

So if your mother lived there until age 20, you are a US citizen.

If you were born after  November 14, 1986 and your mother lived in the US for five years with only '2' years after age 14, it ,means that you are a US citizen if she came to Canada at age 17 or older.

If you were born prior to Dec 24, 1952, you may still be a US citizen if you spent time in the US going to University, etc.

If you think you are a citizen, apply for a US passport.  Be prepared to prove your mother's situation which may mean that you have to find school records, doctor's records, dentist's records, etc.

Even if you are over 52 and did not live in the eh US as required, note 4 at the end of the chart points out that you are likely entitled to an exemption and area US citizen.

If you are a US citizen, which is likely if you are under  55, you can just go to the USA to live.

Your citizenship has nothing to do with whether your mother filed her returns in the US although she should have filed up until the date of her death and if she has an estate, an estate 706 tax return should be filed.

The following chart will show you if you are a US citizen.  The bad news is that if you find yourself to be a citizen and claim that citizenship, you will have to file 6 years of back US taxes.  That is where I come in.  We would be glad to help.
                  

                                                                                                       www.centa.com

NATURALIZATION CHART

For determining whether LEGITIMATE CHILDREN BORN OUTSIDE The U.S.

acquired U.S. citizenship at birth. 

PERIOD            | PARENTS      | RESIDENCE REQUIRED OF:

                          |                        | PARENT                 or                                     | CHILD                               

STEP 1              |STEP 2            |STEP 3                                                            | STEP  4                            

Select                 | Select              | Measure citizen parent's residence                     | Determine whether child

period in             | applicable        | against the requirements for the                         | has since lost U.S.

which                 | parentage        | period in which child was born.                          | citizenship. (The child

child was            |                        | (The child acquired U.S. citizen-                        | lost on the date it became

born.                  |                        | ship at birth if, at time of the                              | impossible to meet the

                          |                        | child's birth, citizen parent had                           | necessary requirements,

                          |                        | met applicable residence                                   | never before age 26.)

                          |                        | requirements.)                                                  |                                           

Prior to               | one parent       | Citizen parent had resided in the                        | None.

05/24/34             | US citizen        | U.S. (Originally only fathers could                 |

                          |                        | transmit: mothers added Oct.94)                  | (see note (5))                         

On/after             | Both are          | One had resided in the U.S.                               | None.

05/24/34             | citizens            |                                                                        |                                           

& prior to           | One citizen      | Citizen had resided in the U.S.                           | 5 year's residence in the

01/13/41             | one alien          |                                                                        | U.S. or its outlying

                          | parent.             |                                                                        | possessions between ages of

On/after             | One citizen      | Citizen had resided in U.S. or its                        | 13 and 21. OR. 2 years'

01/13/41             | one alien          | outlying possessions 10 years, at                        | continuous presence in

and prior             | parent.             | least 5 of which were after age                         | U.S. between ages 14 and

to                       |                        | 16, or if citizen parent served                             | 28. (NONE, if at time

12/24/52             |                        | honorably in U.S. Armed Forces:                       | of child's birth, citizen

                          |                        |(1) between 12/07/41 and 12/31/46                     | parent was employed

                          |                        |(5 of the required years may                               | by a specified U.S.

                          |                        | have been after age 12); or note (2)                   | organization. This

                          |                        | between 12/31/46 and 12/24/52,                         | exemption is not applicable

                          |                        | parent needed 10 years physical                        | if parent transmitted

                          |                        | presence, at least 5 of which                             | under *(1) or *(2) opposite.)

                          |                        | were after age 14.                                            | Notes (1). (2). and (4).

                          | Both are          | One had resided in the U.S. or its                      | None.

                          | US citizens      |outlying possessions.                                          |                                                       

On/after             | Both are          | One had resided in the U.S. or its                      | None.

12/24/52             | citizen              | outlying possessions note (3).                            |                                                       

& prior to           | One citizen      | Citizen has  been physically present in                | None.         

11/14/86             | one alien          | US or outlying possessions 10 years,                  |

                          | parent.             | at least 5 which are after age 14 note (3).          |                                                       

On/after             | Both are          | One had resided in the U.S. or its                      | None.

11/14/86             | citizen              | outlying possessions                                          |                                                       

                          | One citizen      | Citizen has been physically present in I None.     |

                          | one alien          | US or outlying possessions 5 years,                    |

                          | parent.             | at least 2 which are after age 14 note (3).          |                                                       

1. Absence of less than 60 days in the aggregate (total) will not break continuity of physical presence for this purpose. Honorable service in US armed forces counts as residence or physical presence.

2. No specific period of residence is required if alien parent naturalized before child reaches 18 years and child begins to reside permanently in U.S. prior to 18th birthday.

3. Physical presence abroad of dependent unmarried son or daughter as member of household of a person serving honorably in U.S. Armed Forces or employed by U.S. government or international organization may be counted as physical presence.

4. The retention requirement was repealed by Act of 10/10/78. Persons who had on

10/10/78 failed to retain are relieved from having to do so. Those who have previously lost citizenship by a failure to satisfy retention requirements of the Acts of 1934, 1940, and 1952 may NOT be reinstated.

5. Until Oct 20, 94, only father could transmit. Changed with President Clinton signing the Technical Corrections Bill giving citizenship to children of US citizen mothers.

(Aug 16, 2003 recreated from official US documentation for the CEN-TA-PEDE. newsletter of the  CEN-TA GROUP,

 4466 Prospect Road, North Vancouver, BC, CANADA V7N 3L7 www.centa.com PH (604) 980-0321 taxman@centa.com). 

Answers to this and other similar  questions can be obtained free on Air every Sunday morning.
 
Every Sunday from 9:00 AM to 10:30 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth Management presents  a LIVE talk show called "ITS YOUR MONEY" dealing with money, investments and taxes.  I am a guest on the last Sunday of each month.  You can get your questioons answered by callin (604) 280-0600.
 
Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com
 
and, as of July 20, listen to Fred and I on CKNW (www.cknw.com) every Sunday night at 6 PM.  That is 980 on the AM dial in the greater Vancouver area.
 
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SUGGESTED PRICE GUIDELINES - May 17, 2008

david ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at:
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325

Calls welcomed from 10 AM to 9 PM 7 days a week  Vancouver (LA) time -  (please do not fax or phone outside of those hours as this is a home office) expert  US Canada Canadian American  Mexican Income Tax  service help.
pert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
 
Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST for in person or if you are on the telephone in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,200 would be the same with one rental
 
$1,300 would be the same with one business no rental
 
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
A Business for $400 - Rental and business likely $550 to $700
 
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
 

 
 
 
 
 
 

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