Canada taxes for commuting work in the USA -


QUESTION:

I am a Canadian citizen and reside in Canada. Since October 2007, I have a job in USA that requires me to visit USA frequently. My USA payroll taxes are deducted in USA by the employer and I pay my US employer's pension plan and health plan. How should I be filling out my 2007 (1) Canadian Tax Return (2) USA Tax Return ?

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david ingram replies:

You will file a US 1040NR and pay your US federal and state taxes if you are not in a tax free state like Nevada, Washington, Florida or Alaska.

For Canada, you will file your ordinary Canadian T1 General and put the American income on line 104.  (you could put it on line 130 but if you do that, you lose out on RRSP Credit.

You will then add up the US federal AND State taxes plus the Medicare and Social Security taxes paid.  You then use Canadian schedule T2209 to calculate the foreign tax credit you are entitled to (it should be every cent).

If there is some left over, you can use form T2036 to calculate a provincial foreign tax credit.

If you need help, we can look after all of this by email, snail mail, fax or courier.  This older question will give you an idea of who we are, what we do, what it will cost and what we need.
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Is there anyone at this email address available to do my income tax again this year?
Thanks,  

2006 tax client
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david ingram replies:

George Arora, who did your return last year, has left and returned to California and is working for a CPA firm in Beverly Hills as a staff accountant.

My son, Peter Ingram has returned after an absence of two and a half years and David Holroyd and Gillian Bryan are here with me as well on a full time basis.  Another son Mitchell Ingram is coming along fine as a US / Canada Tax preparer while attending Capilano College on a part-time basis.

I am the only one to consult on tax matters at the moment however.

So yes, there are 4 1/2 of us here and, of course:.
 
We are pleased to look after your tax return.

You may send the information by email in .pdf  or word format.  Please do NOT use bitmap or any other word processor. (Number Pages by Hand please).

You may send it by snail mail - If you do, please keep a copy of anything hard to replace. (Number pages by Hand)

You may send it by courier - If you do, please keep a copy of anything hard to replace. (Number Pages by hand)

You may fax it.  If you fax, please make sure anything light has been darkened and, of course, number the pages by hand.

 We ask that the pages be numbered in a corner by hand.  That way if we have difficulty with a page, it is easier to refer to it when talking to you, and  if a page does not come through, we know which page is missing.

When copying on a photocopier or faxing, it is not unusual for one or more pages to double feed and not be reproduced at the other end.

Depending upon whom you are dealing with at my office,  Please send to: taxman@centa.com or gillian@centa.com or holroyd@centa.com or peter@centa.com or mitchell@centa.com if you email.

Please fax to (604) 980-0325  - preferably not at 3 AM because it is a home office. 10:00 AM to 10:00 PM seven days a week is a fine time to fax./

Courier or snail mail to

david ingram's CEN-TA
4466 Prospect Road
North Vancouver, BC, CANADA
V7N 3L7


The preferable multi-line phone number to call  is (604) 980-0321
Another business number is (604) 980-0499 - We use this as a phone out  and  fax out line however and it is more likely to be busy.

The kid's residence phone number is (604) 980-3578 if you just can't get through on the office phone. However, it is not a business phone so please only use it if really necessary.

What do we need you to send us?   The following is not all of it by any means but if you have any of these things, printing out the government form and trying to match the lines makes a lot of sense.

US and CANADA

For US and Canadian returns we need to send in copies of Charitable donation receipts.  Therefore, we need copies of the actual receipts.

For Canadian returns, we need to send in copies of the actual receipts for medical costs. Therefore, we need copies or the actual receipts.

We need copies of or the actual NR4, T3, T4, T5,  T5007, etc. slips. We need copies of W2, W2G 1042S, 8288, 1099-Misc, 1099-Div, 1099R US slips.

In general, if there is a tax deducted on a slip, we need a copy of it.  If it is just income, we do not necessarily need the slip, just the amount but the slip is always nicer to have. 

If there was tuition or other amounts paid for post secondary education, we need the actual slip or a good copy.

If you are self-employed, we do not need the receipts or income.  If you have done a P & L (Profit and Loss) statement, we need the amounts on the statements.

Hints on the statements for Canada.

You can find all Canadian Government tax forms at: http://www.cra-arc.gc.ca/menu/AFAF_T-e.html

If you are Self Employed in 'business' in Canada, I need the amounts you will find on the T2124 form which you can find at:  http://www.cra-arc.gc.ca/E/pbg/tf/t2124/t2124-07e.pdf

If you are a Self Employed Fisher in Canada, I need the Amounts you will find on form T2121 which you can find at: http://www.cra-arc.gc.ca/E/pbg/tf/t2121/t2121-07e.pdf

If you are a Self Employed Farmer in Canada, we need the  amounts you will find  on form  T2042 which you can find at:
 http://www.cra-arc.gc.ca/E/pbg/tf/t2042/t2042-07e.pdf

If you are a Self Employed Professional or A commission Salesperson in Canada  where you do not actually sell a product and have a cost of goods sold, you should fill in Schedule T2032 at: http://www.cra-arc.gc.ca/E/pbg/tf/t2032/t2032-07e.pdf

If you have a Rental house in the US or Canada, Canada wants form T776 filled in at: http://www.cra-arc.gc.ca/E/pbg/tf/t776/t776-07e.pdf

A Canadian employee with business expenses would file form at: http://www.cra-arc.gc.ca/E/pbg/tf/t777/t777-07e.pdf

Notice that the Canadian Forms all have Computer code numbers beside the items asked for.  You should try to quantify your expenses to fit into these codes.  It will make our charges to you less because we do not have to add up amounts to fit into the government schedule.  A good example would be field 8860 for Legal and accounting fees.  Your statement might have  a figure for accounting, a figure for tax preparation and a legal figure for suing a client for an unpaid bill.  For the purposes of the CRA's form, I want those added together and give me one number only for field or line 8860.

Similarly, field 9220 asks for telephone and utilities.  That means that even if you have separate totals for your Business phone, cell  phone, fax, Internet, heat and electricity, the CRA and I only want one total.  Usually, when a client gives us these, they are scattered through his or her information and it takes time to find them and add them which means a larger bill.   The fishing form does not have a place for telephone and utilities and the rental form only asks for utilities in field 9220.

If you are a Canadian who is leaving the country this year, to avoid a $2,500 penalty, you have to deal with form T1161 at: http://www.cra-arc.gc.ca/E/pbg/tf/t1161/t1161-07-e.pdf


 Specific Hints for the United States

All US forms can be found at: http://www.irs.gov/formspubs/lists/0,,id=97817,00.html

Self Employed (fisher, professional, commission sales agent, etc.) need to send in the figures on Schedule C which you can find at
http://www.irs.gov/pub/irs-pdf/f1040sc.pdf

If you have rental income in the US or Canada or France, you need to fill out Schedule E which you can find at: http://www.irs.gov/pub/irs-pdf/f1040se.pdf

If you are a US farmer, (Xmas trees, almonds, oranges, caribou  or beef, etc.,the US wants Schedule F filed at: http://www.irs.gov/pub/irs-pdf/f1040sf.pdf

If you are a US or Canadian  employee filing a US return with business expenses, form 2106 is in order at: http://www.irs.gov/pub/irs-pdf/f2106.pdf

If you are an American filer with a Canadian RRSP, you must file US form 8891 at: http://www.irs.gov/pub/irs-pdf/f8891.pdf

If you have any foreign accounts whatsoever (Canada, France, Spain, Italy, Japan, Indonesia, Dubai, etc.) you MUST FILE SCHEDULE B at:  http://www.irs.gov/pub/irs-pdf/f1040sab.pdf  - Not a choice, if you are the co-signer on your aged mother's account in any country but the USA, you must file Schedule B and answer questions 7 and 8.  You say yes to question 7 if you have signing authority over foreign accounts totaling over $10,000 at any one time in the year.  You answer yes to question 8 if you have an RRSP, an RESP, a RRIF in Canada or the equivalent in any other country.  You are unlucky if you have a RESP because now you have to file form 3520 and likely 3520A. You get to file form 8891 for a RRIF and an RRSP.

If you said yes to question 7, to avoid a minimum $10,000 fine, you must fill in form T D F 90-22.1 for each account you have signing authority over including a company payroll account, a cub scout account, your mother or father's account or a joint account with your foreign spouse as well as your own accounts and you have to fill one out for each RRSP as well. Find this TDF 90-22.1 form at: http://www.irs.gov/pub/irs-pdf/f90221.pdf  -  PS, the $10,000 is a minimum fine, the maximum is up to $500,000 PLUS 5 years in jail.

If the answer to 8 is yes, the fine is:
*   35% of the money in the RRSP Plus
*   5% of the money for every year not reported (that you should have been reporting) since 1989
*   Tax on the amount in the RRSP. 

To be honest, to this date, (Mar 1, 2008) I have never seen the 8891 penalties imposed - not even once yet. However, the TDF 90-22.1 fines are imposed routinely and my record (for silliness) was a 105 year old lady with a $10,000 fine.  I have NEVER had anyone fined who came forward voluntarily. My understanding is that the Dept of the Treasury is presently fining some 1072 people who were clients of a Vancouver Financial consultant, Jerome Schneider, who told his clients not to file them.  Jerome Schneider received a $100,000 fine and 6 months in jail on a plea bargain when he turned in all of his clients and the lawyers and accountants who were assisting. see more on this and other US accountants a and their clients who received jail time at: http://centapede.centa.com/Week-of-Mon-20060227/002468.html

If you already have your US return done and just want the Canadian return done, we obviously need a copy of the US return.  Same with the UK, Australia, Portugal or Libya.

Same thing if Canada or any of the other 200 returns is already done and you just need the US return done.  We need copies of those returns.  Please label each line of the foreign return with the English word.

Hope this helps.

On February 11, 2008, David Ingram wrote:

It is very unlikely that blind or unexpected email to me will be answered.  I receive anywhere from 100 to 700  unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first.  I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. 
e bankruptcy expert  US Canada Canadian American  Mexican Income Tax  service and help
However, I regularly search for the words"PAYING CUSTOMER" and always answer them first if they did not get spammed out. For the last two weeks, I have just found out that my own email notes to myself have been spammed out and as an example, as I wrote this on Dec 25, 2007 since June 16th, my 'spammed out' box has 47,941 unread messages, my deleted box has 16645 I have actually looked at and deleted and I have actually answered 1234 email questions for clients and strangers without sending a bill.  I have also put aside 847 messages that I am maybe going to try and answer because they look interesting. -e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and  help
Therefore, if an email is not answered in 24 to 48 hours, it is likely lost in space.  You can try and resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from 'me', you will have to phone to make an appointment.  Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321.  david ingram expert  US Canada Canadian American  Mexican Income Tax  service and help.
david ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is 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 9 PM 7 days a week  Vancouver (LA) time -  (please do not fax or phone outside of those hours as this is a home office) expert  US Canada Canadian American  Mexican Income Tax  service help.
 
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 for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included." e bankruptcy expert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
 
Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST if in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.
$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,200 would be the same with one rental
 
$1,300 would be the same with one business no rental
 
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up.
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
A Business for $400 - Rental and business likely $550 to $700
 
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
 
This from "ask an income trusts tax service 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, 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 Houston, Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration Tips, Income Tax  Immigration Wizard Antarctica Rwanda Guru  Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist expert preparer expatriate anti money laundering money seasoning FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions Grand Cayman Aruba Zimbabwe South Africa Namibia help USA US Income Tax Convention. Advice on bankruptcy  e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and help .

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