Canadian moving to Houston Texas USA -

My_question_is: Applicable to both US and Canada
Subject:        Canadian going to USA
Expert:         taxman@centa.com
Date:           Sunday January 06, 2008
Time:           07:58 PM -0000

QUESTION:

I am a Canadian Citizen and I have just gotten a job in the USA.  I have a TN-visa.  The job started in December, 2007 and is in Houston, Texas.  I went down there for two weeks in December and my salary began at that point.  My previous employment in Canada ended at the beginning of December, 2007.
I have all the attachments of a regular person: discount broker, credit cards, bank accounts, line-of-credit, RRSP's, wife and three kids.
The family and I will be moving down there in a couple of weeks (mid-January).
I have done a fair amount of reading but I am still unsure of the best timing in filing a Canadian Exit Return and starting the USA filing.
Do I need to file a 2007 USA Tax Return for the two weeks at the end of December, 2007?
I want to do it all right from the start.
I believe it would be best if I become a tax-resident of the USA as soon as possible.
What are the ramifications if I leave the discount-broker account going and do trading (holdback?) -- or would it simplify things if I just closed that account?
Our house in British Columbia is for sale but it looks like it will not sell until after we have been down in Houston for a couple of months.
We are planning to move to the USA permanently.
Thank-you for your help.


-----------------------------------------------------------
david ingram replies:

You will need to file a US 1040NR for the two weeks work and it would be to your tax advantage to consider the day you went to work as the date of your move.  That way, you do not have to report the US earnings on your Canadian return. There are those who mi8ght disagree with me but Wolf Brergelt left his wife and 4 children behind to sell teh house and the judge ruled his departure date was the date he left because they were getting ready to follow.

Your final departure return also needs to taks forms 1161, 1243 and 1244 into account if you are leaving any property behind.

If you have a Home Buyers Plan, it is all repayable or taxalbe now.

The following is sort of like you so make sure the T1161 is filed.

georgearora@centa.com: Please see bottom of message if you wish to unsubscribe.
------------------------------------------




QUESTION:

We moved to the US in December 2004. At the time that we did our 2004 taxes, we did not have any 2004
US income to worry about, so we used ufile.ca to do our Canadian taxes. We have a house in Canada that we
 kept with the intent of renting it out, and were unaware of the requirement to file a T1161 until we began
 working on our 2005 taxes with the assistance of an accountant. By the time he got involved, it was already
 late. In January 2007, CRA assessed a late filing penalty for both myself and my husband as joint owners of the
 property. The statement was sent to our old address, even though we updated our address at the time we sent
 in our 2005 tax returns. My question is this: Is there any way that we can get the late filing penalty forgiven?
 We have done everything else by the books, and we did file the T1161 when our accountant brought it to our
 attention. Thank you.
-------------------------------------------------------------------------
david ingram replies:

The T1161 for a departing Canadian is due on April 30th of the year following the departure.  The penalty is a minimum of $100 or $25.00 per day to a maximum of $2,500.  This is the same penalty for the late filing of a T3 return with distributions.

I know of no method of officially cancelling the $2,500 penalty you will each have received.  You could try writing to the FAIRNESS COMMITTEE and explain the situation and they might cancel it.  for $5,000, it is certainly worth the effort.

You can start looking yup the rules for the FAIRNESS COMMITTEE here:

http://www.cra-arc.gc.ca/agency/fairness/prov_3-e.html

I do not expect them to agree but they might.

You might write to Prime Ministrer Stephen Harper as well.  The penalty is unfair because although easy to find if you know what you are looking for, NO ONE knows about it automatically. 

The tax preparation programs do not tell you to fill it in when you put a date in for departing Canada. 

The $2,500 penalty is imposed after 100 days.

-----------------------------------------------------------------------------------------------

This might help as well.

-
Hello,

Thank you in advance for your help

My situation is:

I am in USA under TN-Visa. I worked 255 days in USA in 2006 and I already filled
the 1040 and 1040NR as dual-status, based on the number of days in USA.

My question is:

Should I declare what I earned in USA to Canada revenue?
How can I avoid double taxation?
Do you do Canadian taxes?
Can I know the fees?

Regards
__________________________________________
david ingram replies;

Too busy in this last two weeks.

This might help

QUESTION: Hi David,

I am Canadian citizen, worked in Canada for the first 5 months of 2006. then moved to US and worked then for the rest of 2006. I have income from Canada employer, canadian bank and US employer. I filed tax return on my US income to IRS already. I haven't done canadian tax return yet. I had thought I only need to file canadian tax return on my canadian income. But it seems both CRA and IRS requested to report my world income to both. I am confused. What should I do to file the tax return to both? 

More specially, I received NR4 slip from CIBC bank. I could not find where to enter this form when I used Ufile.ca. 
How can I enter US W2 form into any Canadian tax form?
How can I enter T4 slip into US tax return form? 

thanks a lot!
_______________________________________________________________
david ingram replies:

An NR4 does not go on the Canadian return.  It goes on Schedules B and 1116 of the US return

The T4 does not go on the US return unless you are filing as a year round resident as in 2 below.

I am too busy to come up with a new answer but this older one will give you an idea.


QUESTION: Hi David,

I really need your help in filling U.S tax and I am getting mixed messages which forms to file. 
I am a Canadian Citizen in U.S on TN visa for more than a year. 
I have RRSP in canada over 10,000 put in fixed bond and saving account in a bank. 
What do I need to file here and what forms do I need to fill. 
Do I still have to file tax in Canada for canadian earning? Please help.
____________________________________________________
david ingram replies;

You need to file a departing Canada tax return and file T1161 if you left more things than your RRSP behind.  The Canadian return will only include Canadian earnings although if you had a Home Buyers Plan, it is all due and taxable on the departing Canada return unless you have paid it back.

For the US, you have two choices:

1.   File a 1040NR dual status statement and a Dual Status 1040 Income Tax return with no standard deduction

or

2.   File a full 1040 which includes your Canadian income and gives you a full standard deduction and the right to file a joint return if married.  This is usually the best if you left Canada early in the year as you did.

If you can't figure it out, file an extension  form 4868 (find it at http://www.irs.gov/pub/irs-pdf/f4868.pdf )

and then send the information to us at the address in blue below to complete for you.
_____________________________
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This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
 
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,000 would be the same with one rental
 
$1,200 would be the same with one business no rental
 
$1,200 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.
 
$1,500 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

$1,600 would be for two people with income from two countries

$2,800 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 $150.00 up.
 
With a Rental for $350
 
A Business for $350 - Rental and business likely $450
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 $800 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.
 
Just a guideline not etched in stone. 
 
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