My_question_is: Applicable to both US and Canada Subject: Who do I pay? Expert: taxman at centa.com Date: Saturday October 22, 2005 Time: 05:27 PM -0700 QUESTION: I am an American Citizen living in Montreal with my wife who is completing her medical residency. I will have lived in Montreal for all of 2005 and earned some income doing contract work across the border in NY. No taxes have been withheld in the US, as I am self employed. I did not earn any income in Canada, although my wife did. My wife's taxes are easy because her Canadian income can be exempted on our US return. However, I'm not sure to whom I will need to pay taxes. I'm pretty sure that I will owe social security type taxes to Canada rather than the US, and I suspect that I will pay the income tax to Canada and somehow exempt it by treaty in the US, but I'm not sure as none of the publications that I can find seem to deal with my particular wrinkle of being a US citizen, living in Canada, and working in the US. Do you know who I will need to pay and if there are any publications dealing with my situation that might help me? Thank you very much. ================================== david ingram replies: Don't ever expect a reply in two minutes again. I was sitting here answering some emails and you dropped in on top of more than 100, most of which will not be answered because I only answer about 30 a week. You and your wife will need to file - drum role please - a total of 6 or 7 income tax returns for 2005. 1. You and your wife will file a joint US 1040 with a Schedule C to report your US self-employment. However, as a resident of Canada, you are exempt from both halves of the US FICA (social security) but will pay both halves of the QPP (Quebec Pension Plan) which is analogous with the Canada Pension Plan. That return will also have a 2555 to exempt your wife's earned income up to $80,000 and possibly one or more 1116 forms to claim foreign tax credits for any tax you pay to Canada on interest, dividends, rents, royalties or your wife's Canadian earned income over $80,000. 2. For various reasons, you and your wife "might" decide to file two federal US returns as "MFS" (married filing separately). You will also file a New York State Tax "IT-203" return as a non-resident to report your self-employed New York State income. Neither Canada nor Quebec has a joint tax return so you will each have to file separate federal and provincial forms. 3. You will file a Quebec Income Tax return reporting the self employed income and paying both tax and QPP. 4. You will file a Canadian Federal T1 General with a T2124 business schedule. You have to prepare the Quebec return first to calculate the QPP payable to calculate your personal tax credit amounts. 5. Your wife will file her Quebec Return 6. Your wife will file her Canadian T1-General If you need help, your situation is my specialty and we would be pleased to look after it for you by fax, email, snailmail or courier. 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 regular 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. And for those in the Vancouver area, Fred is running an infomercial for 1/2 hour every night in October on Channel 10 television at "groooaaannnn" 1 AM in the morning. It has a couple of useful concepts in it that can be recorded to really get the idea. 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 10 AM to 10 PM 7 days a week (please do not fax or phone outside of those hours as this is a home office) email to taxman at centa.com <mailto:taxman at centa.com> 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 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 and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com <http://www.centa.com> . If you forward this message, this disclaimer must be included." Be ALERT, the world needs more "lerts" This from "ask an income tax and immigration expert" from www.centa.com <http://www.centa.com/> or www.jurock.com <http://www.jurock.com/> or www.featureweb.com <http://www.featureweb.com/> . David Ingram deals on a daily basis with expatriate tax returns with: multi jurisdictional cross and trans border expatriate problems for the United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas, San Antonio and Houston Texas Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax and Immigration Wizard Income Tax and Immigration Guru Income Tax and Immigration Consultant Income Tax and Immigration Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer consultant expatriate anti money laundering money seasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions Alaska, Alabama, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Garland, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon. 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