xxxxx xxxx wrote:
I really admire your knowledge on tax matters. I have few questions regarding Canada US taxes.
As a Canadian citizen I am working on TN visa in US. For the year 2009 I worked only in US. I had a Canadian home (primary residence in Canada) which I rented for 10 months in 2009 and finally sold it in December 09. I believe I will have to file my taxes in US as Resident alien and I will also have to file Taxes in Canada.
1. Do I have to declare Canadian home rental income in US?
2. Do I have to file declare net gain for the home sale as income for 2009 in US and Canada? This was my primary residence and I believe net gain on primary residence is exempted for income tax purposes??? Also the home was purchased in 2006 while I was living in Canada. I moved to US in Nov 2008.
3. Can I claim tax benefits for mortgage interest and property taxes in US?
4. I also incurred some mortgage penalties, legal and disbursement fees on home sale. Do I have to declare it in US?
5. I paid Canadian university tuition fees and IT certification fees in 2009. Do I have to file it in both countries?
How much would it cost to file these taxes with you? Can I do it over fax and e-mail?
I would really appreciate your response.
david ingram replies:
1. Yes - as a resident of the US, you are required to report your world income from any country and from any source.
2. The answer is yes and no. If you are planning on reporting your income from the US on your Canadian return, then you are entitled to any profit tax free from the sale of your house on the Canadian Return.
If you decide to be a non-resident of Canada, then there would be a little tax to pay on any increase in value from the day you emigrated to the USA from Canada until the day you sold it. .
3. Yes, you can claim the mortgage interest and taxes on the US return but as a deduction on schedule E against the rental income received, not on schedule A because the property was rented.
4. Of course, you also get to deduct real estate commissions and other costs of sale and there is a good chance that you did not make a profit.
For the US, the house is tax free up to $250,000 of profit from the day you landed in the US. That is, the house is valued for US purposes at its value the day you crossed the border under Art XIII of the US Canada Income Tax convention.
5. The Canadian University Tuition is a deduction or credit in both countries if you need it.
Our cost would be from $1,200 to $1,800 depending upon what state you are in and what you decide your residency is.
Our usual charge for a cross border return in the year of moving is $1,200 plus $300 for a rental and $300 for the sale of a rental.
In addition, it is REALLY important that you get your Canadian return in on time. Failure to file the return on time along with form T1161 is a minimum penalty of $100 and a maximum of $2,500 at $25.00 a day. Three months and ten days more and you have a $2,500 fine even if you have a refund coming.
XXXXXXX XXXXXXX wrote:
I am trying to figure out what to do for my 2008 Canadian taxes.
My husband and I are Canadian citizens living in the US since November 2007. We own a home in the US, have US driver's licenses, US healthcare, and have paid taxes
as a resident (1040) as we have been here for over 183 days in the 2008 tax year.
I'm confused as to what I have to do for Canadian 2008 taxes
. We own a home in Canada (no one lives there, we simply pay for the mortgage) and have sold it effective June 2009. My US income has never left the US. I have never bothered to cancel AB healthcare as it was free this year (but my son does not have it) but I believe it is not longer valid as I have not resided in Canada this past year. I received the 100/month child tax benefits and was on EI Mat leave for 6 mos of the 2008 year but can cancel and pay back the money for child tax benefits if required. I realize I have to file Canadian income tax for 2008 (EI-mat leave and child tax benefits) for myself. My US earned income has never left the US, so I am not sure what I have to use as an exchange rate or if I even need to include it since I haven't lived in Canada? My husband's US income has never left the US either.
Is it mandatory to include my US income under the TN-1 visa job?
I have a US tax bill and now if I do include it, it appears the Canadian gov't wants another 15% on top of what I've already paid in the US.
I'm hoping I'm missing something and just have to declare my CAD income, but don't want to do anything illegal.
Any advise would be greatly appreciated! I am willing to pay for a consultation fee in order to clear up this confusion as well.
david ingram replies:
You are taxable on your mat leave and should not have received the child tax benefit. When you left Canada, you and your husband should have reported a departing date on page one of the T1 return and filed form T1161 and maybe T1243 and T1244 as well. This would have listed your house and any investments for the purpose of the departure.
If the house has just been sold, you will have to file Forms T32062 and T2062A and T2091 for the sale. Failure to file the T1161 has already garnered a penalty of $2,500 plus interest each if the CRA wants to enforce it.
Failure to file the T2062 within ten days of your sale in June will also engender a $25 a day fine (min $100) to a maximum of $2,500 for being 100 or more days late.
By keeping your AB Medical and the empty house and collecting the Child Tax Benefit, you have done some of the things that give the Canadian Government the right to tax you.
Pay back the Child Tax Benefit as soon as possible. File 'your' Canadian tax return and report the US income on the return. (Fill in schedule A and Schedule B to report your world income). Exempt the US earned income on line 256 of the return under Article IV of the US Canada Income Tax Treaty.
You also had to report the Maternity leave on your US 1040.
This older question will likely help.
I started working in the states last April for about 8 months with a TN visa. I was wondering if I have to pay taxes on income earned in the states to Canada as well?
david ingram replies:
You should file a departing Canada Income tax return with form T1161 and maybe a 1243 and 1244 if you have left any assets behind.
These older questions will help a bit
i am a single Canadian working full-time in Texas for a us employer
i have been in the us since Jan 2, 2007 on a tn visa.
i currently have a W2 and also have slips for rsp contributions
from Canada for 2007.
what would be the cost for filing my tax returns to both countries?
also do you recommend contributing to IRA roth's instead of rsp's
when i am working in the us?
david ingram replies:
As described, you have no tax to pay to Canada and should not have bought an RRSP for 2007.
Basically, you should be filing a departing Canada return and look at T1161 to see if it is necessary to file it - Usually, you would file it is you own a summer cottage, home, non-RRSP mutual fund or brokerage account or are leaving a share of a family business or farm behind.
For the US, you would file a US1040. there is no tax return in Texas, Nevada, Alaska, Florida for you to file.
If your intention is to come back to Canada, you should likely NOT buy a ROTH. If you want a tax deduction buy a conventional IRA or participate larger in a company 401(K)
We charge $900 to $3000 for US Canada tax returns
There is a more detailed list further down below.
I am Canadian citizen and have been working in USA on TN-Visa since 2004. I have a valid Canadian driver license, no medical card, working bank account and has no property. All my family is staying with me in USA.
1) Am I suppose to file a Canadian taxes every year.
2) If I do, what would be the roughly tax break up like 20% paying in Canada and 80% in USA.
3) What would be your fee to file Canadian and USA taxes.
Thanks & regards.
david ingram replies:
You should have filed a departing Canada return in 2004. there is no need to file a 2005, 2006, or 2007 return as you have described your situation.
If, on the other hand, the Canadian government asks you for a return for any of those years, you, as a Canadian citizen, are required to file. Report all of your US income on the T1 and then deduct it all on line 256 of the return under Article IV of the US - Canada Income Tax Convention (treaty).
This older question and answer may help
I moved to Nevada for a job July 2006, and still work there now. Do I do my
taxes in Canada and us separately? My earnings for 2006 in Canada were very
david ingram replies:
You have more than one choice.
1. a) You file a departing Canada tax return including form T1161 and 1243 and 1244 if you left more than $25,000 worth of assets behind.
You file a 1040NR Dual Status Statement
for the US and then a 1040 Dual Status Return
to report the US income only. The statement is there to separate out any US income you may have received BEFORE you actually went to the US. You can NOT claim the standard deduction on a Dual Status Return You can only use itemized deductions on a Dual Status Return.
2. a) You file Canada as in 1a) above.
b) You file a 1040 tax return reporting your world income for the year including the Canadian income. Then you file US form 1116 to claim a foreign tax credit for the tax, CPP and EI you paid to Canada. This allows you to claim the standard deduction on the US return.
Good luck. Remember that you can always send the returns here by fax, courier snail mail or pdf email.
I am currently holding a TN visa working for a US employer. I have my family ties to Canada but I reside in the States for more than 183 days/year. Should I file as US resident or Canadian resident for the Tax purpose? In each case, what kind of tax forms or schedules I have to look at?
david ingram replies
If you are applying for an H1B visa and intend to get a green card and your family is not moving unitl the resident alien cards come through, you should be filing as a US resident and not paying tax in Canada. If you have a house, it should be put in your wife's name only. You would file a US joint return with your wife and claim your children as dependents.
If you are not intending to stay in the US and are still spending a lot of time in Canada, you would file as a Canadian resident and claim a foreign tax credit for the taxes, FICA and Medicare taxes you pay to the US after filing your US 1040.
There is an in between position where you might be a factual resident of Canada where you report your US income to Canada but deduct it then on line 256 under Article IV of the US Canada Income Tax Convention. In this case you would be a tax resident of the US and file a joint US return with your wife.
You need to sit down in person or by phone with someone who really understands it.
If your question was not answered fully or you wish to go further, I am available for individual consultations by phone or email or in person for $450 per professional hour.
Please also note that we prepare Canadian, US, Australian, UK and New Zealand returns on a mail in, email, fax, snail mail or couriered basis. At any time, our clients are in 40 countries or more. They have every occupation from nuclear Submarine captains to FedEx pilots to Major Bank officers to Politicians, Diplomats and border patrol officers. My favourite, however, is a penguin catcher in Antarctica among others there..
If you 'really' only have a single question requiring a 'couple' of minutes, you can try phoning me for free as part of the following.
- For a quick free question
Most Wednesday evenings, from 6 to 9 PM Vancouver (Pacific - LA, Seattle) time, I interview others and answer short US Canada, Great Britain, Spain, Indonesia, Mexico, etc. tax and immigration questions. GOTO www.david-ingram.com - the North American phone number is (866) 980-0499 - the local number in the lower mainland is (604) 980-0321.
You might try calling Fred Snyder's own radio program for an answer.
Fred Snyder's "IT'S YOUR MONEY" radio show. on CISL, 650 AM on the dial in Vancouver from 9 to 11:00 AM every Sunday (604) 280-0650 or (877) 280-0650 - You can listen live from anywhere in the world at www.am650radio.com from anywhere in the world. click on the button in the top left hand corner.-
- You might try calling Fred Snyder's weekly radio programs for an answer.
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