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You mentioned an estate handout that did not make
the printer for the Ozzie Jurock Seminar on Saturday and that you would mail it
out to anyone who wanted one.
Please send mine
I did not mean mail as in snail mail. However the
following is now being sent to your email
Last night someone told me that if a Canadian resident dies owning
assets in the US in excess of $60,000, then all his world assets are taxable by
the IRS. I find that hard to believe.
Thanks for your
david ingram replies
the answer or what you have heard is true but the $60,000 has not been a limit
since 1988. If it is real estate or other capital assets any amount is
subject to US estate tax with varying exemption amounts depending upon the year
and total world estate. In addition, if you die owning more
than $1,199,999 of US stock and you have NEVER been to the US or even North
America if you live in France or any of the other 260 odd counties in the world,
your stock estate is subject to US estate tax. (I admit the $1,200,000 number
may have changed and be higher or lower now but spent 1/2 an hour looking and
could not find a change - if anyone reading this knows of a change, please let
me know - its origins were in the 1995 changes to the tax treaty)
FEW Securities people know this.
*** Remember, that the gain is in US
dollars in the US and Canadian Dollars in Canada. When calculating the
profit on the stock, you would use the Canadian / US exchange rate at the time
of the purchase for cost and then use the rate at the time of death for the
So, when it comes to that second home in Palm Springs (as
You bought it for $1,000,000 US on Sept 1, 1998 That
would cost you (in Canadian Dollars) $1,525,700 Canadian.
on Sept 1, 2008 and the property is now worth $1,400,000 US after going up to
$2,000,000 US and then losing 30% in the last two years.
For US estate
tax purposes, the property will represent $1,400,000 in your estate.
Canadian tax, the $1,400,000 US was worth $1,489,740 and there would be a
Personal Property Loss of $35,960 which can be used to offset gains on the
Whistler ski chalet.
The following older question will
help you out a bit.
Is it true that a Canadian citizen, who owns a house in
US, who is not a resident or a citizen of US may be subject to US estate
tax on all property held upon death of that Canadian
The answer is yes but no tax is paid on the Canadian
Property The value of the Canadian Property is used to determine the
amount of US estate tax on US form 706N and then the figure is
For instance for 2008, there is no estate tax on amounts under
$2,000,000 In 2009, there is no tax on amounts over
Depending upon the election and who wins and who controls the
congress and senate, Obama plans or proposes to freeze estates exemptions at
$3,500,000 and have a graduated estate tax that caps at 45%.
to raise the estate exemption to $5,000,000 and have a maximum estate tax of 15%
much more desirable to those with money. However, in 2007,
if you die tomorrow, the limit is $2,000,000 and you are taxable on amounts over
Let's pretend that you have a $300,000 US property and die on
November 1, 2008.
You are subject to estate tax on
Pretend that the estate tax is exactly $345,800 on the
$1,000,000 which exceeds the $2,000,000 exemption.
estate tax would be $34,580 which is 10% of the estate tax because your US
property is 10% of your total estate.
The good news is that the
$34,580 can be used as a foreign tax credit against and capital gains tax
owed by the estate on the property.
So, as an example. If you died
in November and you had paid $100,000 for the property, your estate would have a
deemed disposal and there would be capital gains tax on the $200,000 profit on
If the rest of your income in the year was $100,000,
$100,000 would be added to your taxable income and your Canadian estate would
owe about $40,000 (depending upon the province). However, you would claim
the $34,580 as a foreign tax credit against the $40,000 And your Canadian tax
would be reduced by much, if not all of the $34,580 by using Canadian forms
T2209 and T2036.
Warning - there is also an Estate Tax in most
states. Most use the Federal rates for exemptions, etc. but some start
SUGGESTED PRICE GUIDELINES - Aug 5,
david ingram's US / Canada Services
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
Cell (604) 657-8451 -
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
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 &
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
$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
$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
$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
$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
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
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
18 RRSPs would be $900.00 - (maybe amalgamate a
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
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.
--IRS Circular 230
Disclosure: To ensure
compliance with requirements imposed by the IRS, please be advised that any U.S.
tax advice contained in this communication (including any attachments) is not
intended or written to be used or relied upon, and cannot be used or relied
upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code,
or (ii) promoting, marketing or recommending to another party any transaction or
matter addressed herein.--
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denied. All readers should obtain formal advice from a competent and
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