Thank you very much for this helpful answer. How much would be your rate to take care of the canadian tax return for my husband and I for the year 2005? My medicare card with Quebec is almost expired and they are now sending me the form to renew it. Should I write them and tell them I am no longer living in Quebec since last year or should I just not send them the form for renewal? My husband's medicare card did not reach it's expiration date, should he contact them directly to tell them he was away since a year ago and will there be any consequences since we did not advise them earlier? I am also repaying a student loan in quebec and have received a TP4 to deduct part of the interests I am paying on this loan. Did I need to repay the totality of this loan in 2005 or can I still keep on paying it monthly? Finally apart from the RRSPs which we are planning to repay the whole amount borrowed based on your suggestion (we are repaying in 2006 instead of 2005, is that a problem?) and apart from the condo we are renting, we have a few bank accounts in canada mostly held to manage the condo rental. Can these accounts remain open? Looking forward to hearing from you in the near future, Have a good day! ============================================= David Ingram replies: The RSP has to be repaid before March 1st, 2006. Any later and it is ALL taxable in 2005. Yu can continue to pay the Student Loan. The Quebec Medical is no longer valid and has not been valid since 90 days after you left. There is no sense paying it any more. In fact, if you write and tell them when you left, they will refund the premiums you paid in excess. Your accounts can remain open but you must tell the banks that you are a non-resident. I generally quote between $800 and $2000 for leaving Canada arriving in the US tax returns. You mention the Canadian return only. I strongly doubt that you will find someone who can do the US portion this year. I know that is a strong comment but there are so few people in Florida that can do it, that I just say not likely. You may get a return that is accepted by the IRS but it is not usually right. The US return has to include forms 8891, 1116, T DF 90-22.1 and schedule E to report the rental income in Canada. The 1116 is to report any foreign tax credit. Whoever does one should do the other, In addition, it is quite often better to include the Canadian income on the US return and claim the foreign lax credit or exemption and get a lower tax rate because you can file a joint return. At one time I had 14 offices in Florida (back in the 70's to be sure) and I never saw a local prepare an arriving Canadian return correctly. david ingram taxman at centa.com wrote: QUESTION: Thank you for creating such an informative and insightful website! My husband and I are both Canadian citizens and have been working in the US for more than a year on a TN visa. We worked more than a 183 days a year in Florida, we own a condo which we call home and file our income taxes in the US. In Quebec, we also own a condo which we are renting out through an agency (third party) and we still hold our Quebec driver's license and medical insurance card, although we have not used any of these governement services while we were out of the country.Finally, we are also repaying our RRSP for the First time home buyer's program and hold a bank account in Canada to pay our mortgage for the condo we are renting and are repaying my quebec student loan. Question: Can we be considered 'Deemed Non-Residents' rather than 'Factual Residents' of Quebec/Canada for tax purposes? Is there some way for us to pay our work income tax only to the US? --------------------------------------------------------------- ------------ david ingram replies: The good news is that your wages are only taxable in Florida under Article IV of the US / Canada Income tax treaty as described. However, you should immediately give up your Quebec medical (it was officially dead after 90 days anyway even if you still have a card and even if you are still paying the premium. THE BAD NEWS is that when you leave the country as you have done, the RRSP Home Buyer's Plan is either taxable on your leaving Canada returns or you have to repay the money. I usually advise you to pay the tax if the over all income is less than $35,000. On the final Canadian return you must file forms T1161. . Since the condo in Canada is rented, you must file another Canadian return each to report the rental income and expenses only. This is called a section 216(4) return and is due by June 30 of the following year, i.e. June 30 2006 for the 2005 year. We would be glad to look after the Quebec, Federal and US returns for you in this difficult transition year (and any others of course). ----------- This previous question may help you as well. QUESTION: When we left Canada in early 2001, our accountant didn't ask us to fill up Form T1161 as it wasn't in circulation then. I did some research on the forms used in 2001 and it wasn't there. It appeared in 2002/2003. We did dispose of our property and some investments. Will this be an issue if we come back? Thanks for your input. =============================== david ingram replies: Departure tax rules have existed in Canada since July 17, 1971. Before the formal T1161, you just listed the items in a free form manner. However, your research is incorrect. http://www.cra-arc.gc.ca/E/pbg/tf/t1161/t1161-04e.pdf The form T1161 was originally issued in draft form in about Oct 1996 along with new regulations which added other items for reporting. For instance, up to Oct 1996, no departure tax had to be calculated on the value of shares of a private CCPC (Canadian controlled Private Corporation). There is a certain analogy to the US form 8861 for reporting RRSP accounts - we knew the form was coming for over a year - then we had a draft form for 6 months - and then the full fledged form - however, the rules for reporting were originally made in 1989 and the requirements to report Canadian RRSPs to the US Government was handled with free flow designed reporting rules according to US REV-PROC 1989-45 which was modified by REV-PROC 2002-23 in April and then codified with form 8891 in 2004 http://www.irs.gov/pub/irs-pdf/f8891.pdf). At all times there were big penalties for failing to report a Canadian RRSP. The current penalty is 35% of the amount contributed to the Canadian RRSP plus 5% a year for every year that the RRSP is not reported. This would apply to you as well if you have left a Canadian RRSP behind. Then of course, you need to report your Canadian RRSP accounts and any other Canadian financial accounts on form T DF-90.21 (see bottom of Schedule B of your 1040) and the failure to report the financial accounts (to the department of the Treasury in Detroit) carries a penalty of up to $500,000 PLUS 5 years in jail. At this point in time, I have never seen anyone penalized with the 5% a year for an RRSP account but I have seen several $10,000 penalties for failing to report the accounts to Treasury including one 105 year old lady with a $10,000 fine for failing to report a $38,000 bank account at the Royal Bank of Canada in Edgemont Village in North Vancouver, and a 68 year old Arizona lady with a $60,000 fine for failing to report over $500,000 in Canadian RRSP's. Note that the $60,000 fine was not the 5% a year, it was for failing to report the existence of Canadian financial accounts. http://www.irs.gov/pub/irs-pdf/f9022-1.pdf Back to Canada - By similar rules, departure tax clearly existed before the T1161 was issued and was to be reported in writing without a specific form. If you have disposed of assets affected by form T1161, you should do some amending and be prepared to pay the proper tax to Canada. When you do so, the US government will issue you a federal foreign tax credit and a refund for up to ten years. I cannot guarantee that it will be an issue on your return. At the moment, the CRA is not doing a good job of catching people on these items. I doubt if the CRA is catching 2%. However, the intention is to get them all so i think you should correct the situation to stay clean. Unfortunately, the CRA can go easily go back eight years if they feel that you have wilfully evaded the situation and obviously, since you now know about it, your failure to fix it would be wilful evasion. Your accountant was clearly incorrect in not calculating a departure tax or at least taking it into consideration on your departure. Remember that there is no departure tax to be paid on small amounts. The only time it is necessary to provide security is when the federal tax exceeds the guidelines to be found on form T1243 (http://www.cra-arc.gc.ca/E/pbg/tf/t1243/t1243-04e.pdf) and T1244 (http://www.cra-arc.gc.ca/E/pbg/tf/t1244/t1244-04e.pdf $12,107.50 for Quebec and $14,500 Fed tax for former residents of all other provinces) 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 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) email to taxman at centa.com 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 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 . 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 or www.jurock.com or 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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