CANADA International tax questions - Tanzania, Canada US -

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?

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david ingram replies:

As described, you are a non-resident of Canada and should have filed adeparting Canada return unless you are trying to remain a Canadianresident to avoid capital gains tax on any increase  in value on yourcondo. 


You were clearly a US resident for nine months of 2007.  If you hadfiled a departing Canada return, Form T1161 should have been filed. There is a $25.00 a day penalty for filing it late after April 30th. 

If you wish to see me when you are in town, I have no problem withthat, I charge a minimum $450 plus GST for that kind of consultation asyou will see in the pricing following further on.

Your boy friend remains an American and must file a US tax return nomatter where he lives and no matter where he works.  If he is gone for330 out of 365 days, he can exempt up to $86,000+ of income.  However,with 30% of gross paid to Tanzania, the foreign tax credits will likelywipe out any Canadian or American taxes if you are paid in the $110,000range.

You do not hand in your TN as you leave because then you would not beable to do anything for your company if and when you returned for avisit.

Read the following older question
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QUESTION: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 T1161and maybe a 1243 and 1244 if you have left any assets behind.

These older questions will help a bit


 
xxxxx wrote:
hello
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?

thank you
xxxxx
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david ingram replies:

As described, you have no tax to pay to Canada and should not havebought an RRSP for 2007.

Basically, you should be filing a departing Canada return and look atT1161 to see if it is necessary to file it -  Usually, you would fileit is you own a summer cottage, home, non-RRSP mutual fund or brokerageaccount 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 buya ROTH.  If you want a tax deduction buy a conventional IRA orparticipate 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 beenworking in USA on TN-Visa since 2004. I have a valid Canadian driverlicense, no medical card, working bank account and has no property. Allmy family is staying with me in USA.

1) Am I suppose to file a Canadiantaxes every year.

2) If I do, what would be the roughlytax break up like 20% paying in Canada and 80% in USA.

3) What would be your fee to fileCanadian and USA taxes.

Thanks & regards.

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david ingram replies:

You should have filed a departing Canada return in 2004.  there is noneed to file a 2005, 2006, or 2007 return as you have described yoursituation.

If, on the other hand, the Canadian government asks you for a returnfor any of those years, you, as a Canadian citizen, are required tofile.  Report all of your US income on the T1 and then deduct it all online 256 of the return under Article IV of the US - Canada Income TaxConvention (treaty).

This older question and answer may help

----
I moved to Nevada for a job July 2006, and still work there now.  Do Ido my
taxes in canada and us seperately? My earnings for 2006 in Canada werevery
low.
_______________________________________________
david ingram replies:

You have more than one choice.

1.   a) You file a departing Canada tax return including form T1161 and1243 and 1244 if you left more than $25,000 worth of assets behind.
   
        b)
You file a 1040NR Dual Status Statement for the US and then a 1040Dual Status Return to report the US income only.  The statement isthere to separate out any US income you may have received BEFORE youactually went to the US. You can NOT claim the standard deduction on aDual Status Return You can only use itemized deductions on a DualStatus Return. 

2.   a)   You file Canada as in 1a) above.

       b)   You file a 1040 tax return reporting your world income forthe year including the Canadian income.  Then you file US form 1116 toclaim 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.
--------------

QUESTION:

Dear experts:
I am currently holding a TN visa working for a US employer. I have myfamily ties to Canada but I reside in the States for more than 183days/year. Should I file as US resident or Canadan resident for the Taxpurpose? In each case, what kind of tax forms or schedules I have tolook at?
Thanks
_____________________________________________________________________________
david ingram replies

If you are applying for an H1B visa and intend to get a green card andyour 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.  Ifyou have a house, it should be put in your wife's name only.  You wouldfile a US joint return with your wife and claim your children asdependents.

If you are not intending to stay in the US and are still spending a lotof time in Canada, you would file as a Canadian resident and claim aforeign tax credit for the taxes, FICA and Medicare taxes you pay tothe US after filing your US 1040.

There is an in between position where you might be a factual residentof Canada where you report your US income to Canada but deduct it thenon line 256 under Article IV of the US Canada Income Tax Convention. Inthis case you would be a tax resident of the US and file a joint USreturn with your wife.

You need to sit down in person or by phone with someone who reallyunderstands it.
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This is not intended to be definitivebut in general I am quoting $900 to $3,000 for a dual country taxreturn.
$900 would be one T4 slip one W2 slipone or two interest slips and you lived in one country only (but werefiling 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 onerental
 
$1,300 would be the same with onebusiness no rental
 
$1,300 would be the minimum with amove in or out of the country. These are complicated because of theback and forth foreign tax credits. - The IRS says a foreign tax credittakes 1 hour and 53 minutes.
 
$1,600 would be the minimum with arental or two in the country you do not live in or a rental and abusiness 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 andyou 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 andno capital gains, etc. for $200.00 up.
 
With a Rental for $400, two or threerentals for $550 to $700 (i.e. $150 per rental) First year Rental -plus $250.
 
A Business for $400 - Rental andbusiness likely $550 to $700
 
And an American only (lives in the USwith no Canadian income or filing period) with about the same things inthe same range with a little bit more if there is a state return.
 
Moving in or out of the country orpart year earnings in the US will ALWAYS be $900 and up.
 
TDF 90-22.1 forms are $50 for thefirst 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 - (maybeamalgamate 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 theCanadian return as a guide for seven years at a time will be from $150to$600.00 per year depending upon numbers of bank accounts, RRSP's,existence of rental houses, self employment, etc. Note that thesereturns tend to be informational rather than taxable.  In fact, ifthere are children involved, we usually get refunds of $1,000 per childper year for 3 years.  We have done several catch-ups where the clienthas received as much as $6,000 back for an $1,800 bill and one recentlywith 6 children is resulting in over $12,000 refund. 

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