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QUESTION:
I bought $10,000 (CAN) RRSP (for 2002 Tax year) in March 2003 for the 1st
time. Plan to buy another $22,000(Can)(for 2003 tax year) in March 2004 in
order to have tax savings and not pay tax like i did in 2001. Paid
$12,000(Can) in tax because i did not buy RRSP that year (2001).
THE QUESTION IS THIS:
1. I AM CANADIAN RESIDENT BUT NOT CITIZEN YET, WORK PRIMARILY IN THE USA
WITH H1-B VISA, WHILE I LIVE IN CANADA (WIFE &KIDS).
DO I NEED TO REPORT THIS TO US SINCE I AM NOT US CITIZEN OR RESIDENT BY
STATUS.
I NORMALLY FILE 1040 BECAUSE I HAD STAYED IN US FOR 3YEARS AS STUDENT BEFORE
I IMMIGRATED TO CANADA LEGALLY. IN A WAY FOR TAX PURPOSE I FILE AS RESIDENT
SINCE 2000 YEAR IN US.
2. EVERY YEAR I FILE US TAX, THEN FILE CANADA AFTER SINCE 2001 WHEN I BECAME
CANADA RESIDENT. THEREFORE WHERE DO I STAND FOR TAX ADVANTAGE WITH RESPECT
TO FUTURE TAX FILINGS, RRSP SAVINGS AND WITHDRAWAL. FOREIGN ACCOUNTS GREATER
$US 10,000 EQUIALENT REPORTING TO IRS AND DEPT OF TREASURY - IS THAT
APPLICABLE TO ME SINCE I AM NOT US CITIZEN OR US RESIDENT BY LEGALITY.
I WILL APPRECIATE YOUR REPLY AND CLARIFICATIONS ON WHAT TO CONSIDER NOW OR
IN FUTURE.
PLEASE SELECT ME FOR AN ANSWER, I NEED ONE SOON.
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david ingram replies:
If you are filing a 1040, you are filing as a tax resident of the USA and should file your world income. If you wish to claim yourself as a non-resident under Article IV of the US/Canada Tax Treaty, you should file a 1040NR. Page 5 of the return has all the spots to show yourself as a claimant under the treaty.
However, you can file a 1040 and report your world income and file it as a joint return which will lower your US tax liability. this will not do you a lot of good over-all because you are still liable for full Canadian taxes.
In either case, you are then taxable in Canada on your world income. You would then file your Canadian return and if you bought an RRSP, you would or could use it as a deduction. However, $20,000 worth sounds like more than you should need unless you are making over $110,000 a year. It sounds to me like you have not been claiming enough foreign tax credit for the taxes you are paying to the US.
You shouild have someone like myself (experienced in both tax systems) review your old returns before you make your RRSP contribution for 2003. I am happy to see someone in your position on a Saturday.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321
New email to [email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
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another similar question will be as we lump them.
You may find more answers at www.centa.com
David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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