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David I would really appreciate your advice on the following. As soon as I have some more money and a job I pledge to use your services!
Background:
I am a French national who became a Canadian resident in December 2002 and moved to the USA in September 2003 to study. I received only about CA$1,100 of revenues in Canada during my stay there (also worked for free for another company and kept all transport receipts etc but I was told this is useless). CA$118 of taxes were deducted on my one-month salary.
I am planning to work for a year in the USA after the end of my program before coming back to Canada and hopefully staying there (read, if I find a good job!) and becoming a Canadian citizen after a few years. For tax purposes, I am a non-resident in France and the US and I believe I am now a factual resident in Canada (as such I still receive GST/PST reimbursements in Ontario). I only maintained one bank account in Canada and my wife moved with me to the US, but I now look at Canada as my "country of adoption" and as such I also feel I should remain a tax resident there.
Study financing:
I took a US$30,000 loan from France to finance my studies, and I currently pay back the interests every month. I also received a US$22,000 French-administered scholarship funded by the US government. My program costs nearly US$37,000 a year in tuition and other university-related fees (+$3,000 in books). This amount was reduced by a scholarship from my school, $11,000 this academic year and probably about $14,000 for the next academic year. The program lasts two years and include a paid internship ($4,000 to $8,000 expected) this summer.
I'm in the process of completing my tax declarations in Canada, France and the US... I believe I can claim some exemption on the tuition and the loan interest payments, but I am not sure whether I should do this in the US or in Canada (I imagine it is not possible to do it in both!), nor how I should proceed to do this in practice, i.e. on the tax forms. I am required to report my US government scholarship as income in the US (my sponsor will pay the required tax), but do not know if I should also do it in Canada. I'll figure it about France later, but I think I don't have to report it there even though all the money was sent from there.
For the US my sponsor requires me to use a tax service called Grantax, but their expertise seems to stop at the border and even then I worry that they may file a claim including loan interest and tuition exemption in the US rather than in Canada, and this on my behalf...
As a factual resident, I also don't know to what extent the tax treaties between the 3 countries affect my situation.
My aim is to avoid double-taxation and reduce my future incomes in Canada (in priority) and then the US by any available exemption. Your guidance would be most helpful, given that you are usually so knowledgeable in your mailing list.
Last question: I worked for free for a company in Ontario for 2 months last year. They didn't even pay my transportation or anything, but I did it for the experience it gave me. I kept all my subway tickets receipts and was wondering if I can do anything with them...?
Sincerely,
GXXXXXXXXXX
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david ingram replies:
If you wish to remain a factual resident of Canada for 2003, you will report your scholarships in Canada less $3,000 Canadian on line 104. You will then claim your tuition and $400 a month (see Schedule 11) as an education amount.
If you have any taxable income at that point, you will claim a foreign tax credit in Canada for the tax paid to the US.
I cannot comment on the French part at this time. I just do not have the time to explore the US / France Treaty at the moment.
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