Interest income earned in Canada by US resident -

QUESTION:
 I am deriving interest income from a bank account in canada
I am a US citizen and NOT a  resident of canada.
Do  i have to report my interest income on the US return  or on both Canada
and US?
Secondly, how much would it cost me to have a professinal like yourself
handle this matter for me ?
---------------------------------------------------------
david ingram replies:
You are supposed to tell the bank that you are a non-resident of Canada and
a resident of the USA.
The bank will then deduct 10% income tax under Article XI of the US / Canada
Income Tax Convention (1980)
and remit it to the CRA,  the bank then issues you a NR4 form at the end of
the year showing the amount of interest received and the amount of tax paid
on your behalf.
You then convert the amounts to US dollars and put the interest on your
Schedule B  - Be sure to check off the two questions at the bottom of
Schedule B because failure to do so (and fill in the form required) can
result in a fine of up to $500,000 PLUS 5 years in jail.
You will also fill in form 1116 to report the tax paid to Canada and claim a
foreign tax credit.
If the bank has not deducted for you so far, they will NOT deduct
retroactively and you should file an information return to pay the 10% for
2005 (and any other years if you have had the account for a while)
Typically I charge $800 to $2000 Canadian (up from last year's quotes of
$750 to $1,500 because the foreign account and RRSP reporting was taking
longer than the actual return preparation) for looking after a US / Canadian
return.
Fixing yours for this first year would likely be in the low end.
Answers to this and other similar  questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am a
permanent guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show
called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Call (604) 280-0600 to have your question answered.  BC listeners can also
call 1-866-778-0600.
Callers to the show and questioners on this board can also attend the
Thursday Night seminars on finance and making your Canadian Mortgage
Interest deductible.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
Home office at:
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 9 AM to 9 PM 7 days a week (please do not fax or phone
outside of those hours as this is a home office)
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www.centa.com <http://www.centa.com/>  www.david-ingram.com
<http://www.david-ingram.com/>
Disclaimer:  This question has been answered without detailed information or
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