Permanent Resident / US citizen wants t know about mortgage interest as a deduction

David,
I am new to your daily newsletters. Enjoy them very much. I am a US citizen
now living in Canada with Permanent Resident status since Jan. 2005. I do
now have a SIN as well as a Social Security number. I currently do not do
any work within Canada. I am an entertaiiner working Vegas, TV, cruise
ships, and corporate convention dates....all in the US. I also formed a
s-corp in April of 05 but have not used it at all. I intend to file a
dormant return on that and intend to keep it in the event I chose to use it
in the future. I make quarterly estimated payments to the IRS. My Canadian
wife and I live here in BC and we own a house together that we bought in
Dec. of 2002.

1. Am I to assume that I will be paying Canadian taxes as of 2005?

2. Am I assuming correctly that I will be required to file my 1040 federal
return to the US and then have a Canadian accoutant file a British Columbia
return?

3. I have been deducting my mortgage interest on my US 1040. If I have to
file a Canadian return too, will I be able to deduct the mortgage interest
in Canada as well?
4. My wife is a school principal. Can she deduct the mortgage interest on
her Canadian return?
Thank you.


david ingram replies;

1a You will file a US 1040 and possibly state returns for states that you
perform in.

1b You will then file a Canadian T-1 reporting all the income again and
calculate Canadian tax.

2. It is better to have the same person do both the US and Canadian returns
at the same time. I provide that service.

3. The mortgage interest is not automatically deductible on your Canadian
return although it can be made deductible over time by following the
precepts set out in my November 2001 newsletter which you can find in the
top left hand box at www.centa.com.

4. Your wife may not deduct the mortgage interest either without having
arranged or rearranged her affairs as above.

5. I trust that you have filed a joint return with your wife for 2002, 2003
and 2004. If not, we should refile before Xmas. You will get back $2 to
3,000 per year by filing a joint return.

Hope this helps.

You might want to invest in an hour or two of my time to explain it all to
the both of you. As a self employed entertainer, you can arrange your
affairs to make the mortgage deductible. this assumes that you have an open
mortgage and or can make extra payments on a regular basis.