US Canada taxes - year of move to the USA T1161 8891 TDF 90-22.1 -

xxxxx xxxxxx wrote:
Hi,
I think I am over my head with trying to help my sister with filing her taxes in the US and Canada.
She left it to the last moment and I am feeling rather under pressure.

Facts:
She was employed by Cdn Division of Company Jan1 to July 31 2007 and is a Cdn Citizen
She was employed/transferred to the US division of same company Aug 1 2007, but commuted from Canada til Sep 1st.

She still owns a house in Ontario, which she now rents out. She is renting an apartment now, but will be buying a condo in the next month in the US. This is the first time she is working for an employer in the US and residing there.

The US employer has deducted Social Security Tax on her wages there.

Her T1 return includes a T4, Employee GST Rebate Form and declaration of condition of employment. I think she may have a T5 also.

No dependents and single.

I was thinking it would be a simple process of divying up the income and paying tax on what she earned in each country to the respective countries.  Starting to worry that this is not the case. So before I fill out an 1040 NR in error and miss important things...

Help... what would it cost to have a professional complete these forms --- or if I am on the right track I would love a push forward. I do have T1 tax experience, but....

Can you also advise her on future years in which she will be receiving rental income from Canada and an income from the US company.

If I can't complete the returns for her - I would like to at least give her a contact that can  help her - I'll miss out on the trip to visit her in NYC but I'll worry less that I messed something up for her.

thanks

------------------------------
david ingram replies:

Do Not feel bad.  we usually quote $900 to $3,000 for a US Canada Income tax return.  Do it wrong and miss the T1161 which you did not mention and the automatic Canadian fine is a minimum of $100 for 4 days late and $2,500 for 100 days late.

A changing country tax return is always $1,200 and a rental would add another $300 so we are likely at $1,500.  Of course, we would be happy to look after her.

If she has a Homebuyer's plan in Canada, it had to be paid back by Feb 29 (in 2008) or the outstanding balance is taxable in full on the departing Canada return for 2007.

You have also missed filing the NR6 for both years from your email.

Fir the US, she also has to deal with forms TDF 90-22.1 and 8891 if she has Canadian accounts she left behind and an RRSP.  Saying that she is going to buy in the US implies she intends to stay a while so has to dot every i and cross every t. to avoid big penalties - The minimum for failure to file the TDF 90 is now $10,000 and I have had a 105 year old lady get the $10,000 fine.



I assume she transferred on an L1 visa but the following q & a should help you  as well.

------------------------------

QUESTION:

I started working in the states last April for about 8 months with a TN visa. I was wondering if I have to pay taxes on income earned in the states to Canada as well?


------------------------------------------
david ingram replies:

You should file a departing Canada Income tax return with form T1161 and maybe a 1243 and 1244 if you have left any assets behind.

These older questions will help a bit


 
xxxxx wrote:
hello
i am a single Canadian working full-time in Texas  for a us employer
i have been in the us since Jan 2, 2007 on a tn visa.
i currently have a W2 and also have slips for rsp contributions
from canada for 2007.

what would be the cost for filing my tax returns to both countries?
also do you recommend contributing to ira roth's instead of rsp's
when i am working in the us?

thank you
xxxxx
-------------------------------------------------
david ingram replies:

As described, you have no tax to pay to Canada and should not have bought an RRSP for 2007.

Basically, you should be filing a departing Canada return and look at T1161 to see if it is necessary to file it -  Usually, you would file it is you own a summer cottage, home, non-RRSP mutual fund or brokerage account or are leaving a share of a family business or farm behind.

For the US, you would file a US1040.  there is no tax return in Texas, Nevada, Alaska, Florida for you to file.

If your intention is to come back to Canada, you should likely NOT buy a ROTH.  If you want a tax deduction buy a conventional IRA or participate larger in a company 401(K)

We charge $900 to $3000 for US Canada tax returns

There is a more detailed list further down below.



I am Canadian citizen and have been working in USA on TN-Visa since 2004. I have a valid Canadian driver license, no medical card, working bank account and has no property. All my family is staying with me in USA.

1) Am I suppose to file a Canadian taxes every year.

2) If I do, what would be the roughly tax break up like 20% paying in Canada and 80% in USA.

3) What would be your fee to file Canadian and USA taxes.

Thanks & regards.

----------------------------------------------------
david ingram replies:

You should have filed a departing Canada return in 2004.  there is no need to file a 2005, 2006, or 2007 return as you have described your situation.

If, on the other hand, the Canadian government asks you for a return for any of those years, you, as a Canadian citizen, are required to file.  Report all of your US income on the T1 and then deduct it all on line 256 of the return under Article IV of the US - Canada Income Tax Convention (treaty).

This older question and answer may help

----
I moved to Nevada for a job July 2006, and still work there now.  Do I do my
taxes in canada and us seperately? My earnings for 2006 in Canada were very
low.
_______________________________________________
david ingram replies:

You have more than one choice.

1.   a) You file a departing Canada tax return including form T1161 and 1243 and 1244 if you left more than $25,000 worth of assets behind.
   
        b)
You file a 1040NR Dual Status Statement for the US and then a 1040 Dual Status Return to report the US income only.  The statement is there to separate out any US income you may have received BEFORE you actually went to the US. You can NOT claim the standard deduction on a Dual Status Return You can only use itemized deductions on a Dual Status Return. 

2.   a)   You file Canada as in 1a) above.

       b)   You file a 1040 tax return reporting your world income for the year including the Canadian income.  Then you file US form 1116 to claim a foreign tax credit for the tax, CPP and EI you paid to Canada.  This allows you to claim the standard deduction on the US return.

Good luck.  Remember that you can always send the returns here by fax, courier snail mail or pdf email.
--------------

QUESTION:

Dear experts:
I am currently holding a TN visa working for a US employer. I have my family ties to Canada but I reside in the States for more than 183 days/year. Should I file as US resident or Canadan resident for the Tax purpose? In each case, what kind of tax forms or schedules I have to look at?
Thanks
_____________________________________________________________________________
david ingram replies

If you are applying for an H1B visa and intend to get a green card and your family is not moving unitl the resident alien cards come through, you should be filing as a US resident and not paying tax in Canada.  If you have a house, it should be put in your wife's name only.  You would file a US joint return with your wife and claim your children as dependents.

If you are not intending to stay in the US and are still spending a lot of time in Canada, you would file as a Canadian resident and claim a foreign tax credit for the taxes, FICA and Medicare taxes you pay to the US after filing your US 1040.

There is an in between position where you might be a factual resident of Canada where you report your US income to Canada but deduct it then on line 256 under Article IV of the US Canada Income Tax Convention. In this case you would be a tax resident of the US and file a joint US return with your wife.

You need to sit down in person or by phone with someone who really understands it.
------------------------


On Mar 14, 2008, David Ingram wrote:

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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.
 
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