Cross-Border Assistance - moving to DEPARTURE TAX T1161, T1243 T1244 - Dan Walkow, Darrell Thompson -



Hi-

 

My wife Mary is a Canadian citizen with a temporary Green Card, and will be applying for her permanent Green Card next month.  (I am a US citizen and resident).  In the meantime she has to file US Income Tax for 2006 and, very soon, 2007.  She is also trying to determine how to "Exit Canada" from a tax standpoint.  We know she has to move her investments from a Canadian financial manager to one licensed in the US and, if appropriate, move some or all of her investments form Canada to the US.  We are looking for someone who is familiar with the related cross-border issues, and who can assist us in handling them.  Mary currently has all of her personal and real assets in Oakville, Canada (outside Toronto). 

 

Are you qualified and able to assist us in this regard?

 

Thanks,

Don Smith

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david ingram replies:

Way back when I had an office in the Bronte Mall in Oakville so do know the area.

Your wife does not need to move to a US broker if she does not want to.  Darrell Thompson of Blackmont Securities in Toronto is skilled at  cross border issues with stock accounts and Dan Walkow is equally skilled at Seabank capital on the edge of White Rock, here in BC.  They are set up to handle the kind of cross border investment issues you have. There is an advantage to leaving the account in Canada because of a bond for departure tax.

Your wife has to sell a departing Canada return which means that her stock Portfolio and any other assets such as a Collingwood summer cabin or antiques or valuable paintings, a Steinway Piano, etc., have to be valued the day she leaves the country and forms T1161, T1243, and T1244  filed.  If it turns out that she owes Canadian Departure Tax, if she leaves the securities Account with a Canadian broker like Dan Walkow or Darrell Thompson, she can have the broker post security for the tax, which means that she does not have to pay the tax until she actually SELLS (as opposed to 'is presumed or deemed to have sold') the stock.

With regard to the tax returns, that is what we do and would be happy to help you.  A couple of these older questions will give you some other info.

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QUESTION: 1. have been trying to find ethical investment firm to go with in Canada and can not seem to get any unbiased answers We live in Red Lake Ontario (landed immigrants), but are also US citizens

2. Is this Stansberry & Associates (http://www.stansberryresearch.com ) legit, as they seem to have many different opportunities claiming great returns
Pinchot Retirement Plan,  Master Limited Partnership, Market Index Target Term Security , Oakmark Select Funds
Thanks greatly looking forward to your email


---------------------------------------------------------------------------david ingram replies:
I have no good or bad knowledge about Stansberry and Associates. None of my clients deal with them to my knowledge.

(one person wrote back to say they are happy with the service from Stansberry  after I wrote the above)

>From looking at their website, they seem to be a newsletter operation as much as anything.  I have about 15 interviews with newsletter writers on gold (John Embry), oil, uranium (Martin Kafusa), silver (Sean Rahkimov) real estate (Ozzie Jurock), futures and commodities (Victor Adai), Resources in General (Elsworth Dickson, Publisher of Resource World)  etc at www.howestreet.com - mostly in the third column.

Two ethical people who specialize in selling securities, RRSPs, etc., to US citizens in Canada or Canadians in the US  are:

Mr Darrell Thompson
Blackmont Securities
Toronto
Local    (416) 874-8007
LD        (866) 775-7704
www.blackmont.com

AND

Dan Walkow
Seabank Financial
White Rock
Local     (604) 541-9952
L D        (866) 541-9952
www.seabankcapital.com
__
These two individuals and their companies have gone to the effort to get themselves registered just about everywhere so they can deal with a Canadian in Florida or California or Nevada, etc.
____________________________________

Note that because of their specialty, they tend to deal with accounts in excess of $200,000

However, I am sure that both parties would welcome an exploratory call.
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Dear Mr. Ingram:
I got your email address and website from browsing through the Internet regarding tax inquires.
In less than two months, I will be moving from Canada to United States to get married and reside with my husband. Eventually, we want to move back to Canada, perhaps in 8 to 10 years so we want to ensure that we have our paperworks in order before leaving Canada.

Here are my situation:
I own a condo that I am currently selling. I will sell any properties and furnitures that I have. I will also cancel any health plan and forward all my mail to my Unites States address. I do not own stocks or mutual funds. Currently I am a self employed who pays installments on my taxes and GST.

Questions:
1. I had called the International Tax Canada office who told me to fill in NR73 (Determination of residency status) after I left Canada. However there are several sites that indicate that it is not recommended for me to fill this form unless requested to do so. I also remember reading that you commented NOT to fill this form. Is there a way for CRA to find out that I have never fill in form NR73 once I leave Canada?

2. Departure Tax - I read that if one "has lived in Canada for more than 5 years, the individual's capital assets are deemed sold at FMV on which capital gains tax is payable". If I am not mistaken, there is an exception to this rule regarding sale of property for personal use (main habitat - not rental) therefore the gain that I get from selling my condo should not be taxable for departure tax/exit return. Is there anything else that could be taxable under departure tax?

3. Is there any forms that I am obligated to fill before leaving Canada permanently and submit to CRA (without filling in form NR73)?
T-1161 (List of Properties by Emigrant Canada)
T-1243 (Deemed Disposition of a property by an Emigrant Canada)

4. My client/employer is having a hard time trying to find a substitute for me. They're wondering if I might still be able to work for them from United States for couple of months up to one more year. If I agree to this, I am worried of the tax implications because this means that I would still need to file T1 tax return every year. Moreover I plan to close my Canadian bank account to sever ties with Canada. Could you advise me on this matter?

Thank you very much for your help with this. Any insights would be greatly appreciated. I live in Greater Vancouver area and am available by phone (604-783-0959) if you think that it would be easier to discuss this on the phone or by appointment at your convenience.

Regards,

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david ingram replies:

Because you are moving to the US which is a Tax Treaty country, you do not need to get rid of all your Canadianisms. Article IV of the Treaty says very succinctly that you are taxable where  your permanent home is available to you. 

Therefore, if you have a $300 a month rented apartment wherein you live in Coos Bay Oregon and have rented your $5,000,000 Canadian house out to strangers for a year or more and it is not available to you to move into 'tonight', and you are in the US for more than 183 days in the calender year AND you are living with your husband in the US, you are only taxable in the US on your world income and are taxable in Canada on Canadian source income. 

If you are working 'in the USA' for a Canadian employer by telecommuting, that is NOT Canadian Source income.  Canadian Source income would be interest or dividends, royalties, rents, etc.

1.   If I were you and intended to return to Canada anytime, I would keep the Canadian condo and rent it out.  By keeping the condo, you are ensuring that you will have a place to live in Canada at today's price.  For instance just 4 years ago, you only needed $268,000 US to buy a $400,000 Canadian condo.  Today, you need $400,000.  There are a lot of us that think that it will cost $500,000 US to buy a $400,000 Condo in another five years or less.  You will have to file form 1159 and T776 every year to report the rent but you will have a good investment in one of the strongest economies int he world and will not have to pay a $10,000 real estate commission to sell it. (sorry Realtors)..

2.   If you sell the unit before or as you leave Canada, you will not owe tax on the sale of the condo. If you have no stock, mutual funds, summer cabin, publishing rights or share of a family farm or business, it is not likely you have anything else that would be subject to departure tax.

3.   The T1161 would be filled in if you should decide to rent out the condo.  However, as described, you would not need to fill in the 1243 or the 1244.

4.   If you take the job, bill your ex employer from the US.  Go to a stationary store and buy an invoice book and a rubber stamp for your business name which could be as simple as first last name's Services.  No Corporation or other registered name is required.  When you file your 2008 return, you would not file a Canadian return for those fees because they were NOT earned in Canada.  You could just make up an invoice on your computer but I assure you that having a little blue invoice book has a nice touch to it and is quite acceptable and easier.  You can even set up an office in your home and write off some expenses for your home office including your computer, desk, LD phone, share of electricity, heat, rent and or mortgage interest and taxes..
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These older questions should help



QUESTION:

I am currently living in Illinois.  I am about to come off of maternity leave from my Toronto company and I intend to continue to work for them through the Internet.  My US immigration has not gone through yet.  Do I need to wait until I have US status to work or can I start right away since I'll be working only for my Canadian company?
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david ingram replies:

You can telecommute. You will owe tax to the US NOT Canada.

You might want to send the returns here.

 This older question should help as well

QUESTION:

Hi David,

I am a TN visa holder working in Seattle, and my wife is on a TD visa and she is citizen of China. We are determined as non-resident to Canada.

Can she telecommute from the US, and providing software consulting service to Canadian company? Is she allowed to work remotely while being a TD visa holder?

Does she need to file taxes to CRA?

Thank you very much.

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

She is not supposed to take a job away from a legal US resident.

Telecommuting to Canada does not take a US job away and should not be a problem. 

The Canadian Employer should not withhold any Canadian tax either.

She does NOT owe tax to Canada if she provides all her services from the USA.

She will / does owe tax to the US on the earnings and it should be reported on a schedule C on your joint 1040 US tax return.

She will also owe FICA (Social security tax) and should. send in form SE as well.

Hope this helps
------------------------

QUESTION:

Hello
I am a 26 year old Canadian who has been residing in FL since June 2006. I married an American the following month.
I have been unemployed since and am going to fill my Canadian taxes.

Is it possible for someone in FL to file out my taxes for me...or do i have to travel back to Canada to do so. 

Thanks so much
I find your website very fascinating :)


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

Unless you have a rental house, you should not have to file a
Canadian tax return.  If you have bank accounts or other interest or dividends from an investment account, the payers in Canada are supposed to be deducting 10% tax on interest and 15% tax on dividends.

We can do  your returns for you by mail or email, fax or courier.

You should likely be filing a joint US 1040 with your spouse.

You do have to do a departing Canada return for 2006.

This other question might help.

georgearora@centa.com: Please see bottom of message if you wish to unsubscribe.
------------------------------------------



QUESTION: Hi David,

I am Canadian citizen, worked in Canada for the first 5 months of 2006. then moved to US and worked then for the rest of 2006. I have income from Canada employer, Canadian bank and US employer. I filed tax return on my US income to IRS already. I haven't done Canadian tax return yet. I had thought I only need to file Canadian tax return on my canadian income. But it seems both CRA and IRS requested to report my world income to both. I am confused. What should I do to file the tax return to both? 

More specially, I received NR4 slip from CIBC bank. I could not find where to enter this form when I used Ufile.ca. 
How can I enter US W2 form into any Canadian tax form?
How can I enter T4 slip into US tax return form? 

thanks a lot!
_______________________________________________________________
david ingram replies:

An NR4 does not go on the Canadian return.  It goes on Schedules B and 1116 of the US return

The T4 does not go on the US return unless you are filing as a year round resident as in 2 below.

I am too busy to come up with a new answer but this older one will give you an idea.


QUESTION: Hi David,

I really need your help in filling U.S tax and I am getting mixed messages which forms to file. 
I am a Canadian Citizen in U.S on TN visa for more than a year. 
I have RRSP in canada over 10,000 put in fixed bond and saving account in a bank. 
What do I need to file here and what forms do I need to fill. 
Do I still have to file tax in Canada for canadian earning? Please help.
____________________________________________________
david ingram replies;

You need to file a departing Canada tax return and file T1161 if you left more things than your RRSP behind.  The Canadian return will only include Canadian earnings although if you had a Home Buyers Plan, it is all due and taxable on the departing Canada return unless you have paid it back.

For the US, you have two choices:

1.   File a 1040NR dual status statement and a Dual Status 1040 Income Tax return with no standard deduction

or

2.   File a full 1040 which includes your Canadian income and gives you a full standard deduction and the right to file a joint return if married.  This is usually the best if you left Canada early in the year as you did.

If you can't figure it out, file an extension  form 4868 (find it at http://www.irs.gov/pub/irs-pdf/f4868.pdf )

and then send the information to us at the address in blue below to complete for you.
_____________________________


On Mar 14, 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. 
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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.
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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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