Sent: Tuesday, October 17, 2006 10:19 PM To: taxman at centa.com Subject: sale of house My husband is a US citizen and I am a Canadian. We have lived in Canada for 7 years and we are now returning to the US for employment. (and he has filed US tax returns!) We are selling our house in Canada and wondering if we can use the profit to buy a house in the US without being taxed on it. Also we don't know what is the best thing to do with our RRSP's which amount to about $70,000. D. xxxxxx ------------------------------------ david ingram replies: He should take out Canadian citizenship BEFORE he leaves. It will make it far easier to return immediately when your US medical runs out and you feel the need to return for medical reasons. If you already have a green card, you should have been filing your US returns as well. If you have a green card and he is a citizen, you may make a profit of up to $250,000 each on the sale of the house with no tax to pay although the sale must be reported and exempted on schedule D of the US 1040. There is no tax on the profit in Canada if it was the only house you owned and you lived in it as your personal residence. My suggestion is that you keep the RRSP's in Canada. However, remember that you will have to file your forms 8891 and TDF-90 which you can find at www.irs.gov. The penalties NOW for not filling in those forms are up to $500,000 PLUS five years in jail if they have not been filled in while he has been here (and you if you have a green card) for the last 7 years. This old Q & A may help taxman at centa.com: Please see bottom of message if you wish to unsubscribe. ------------------------------------------ My_question_is: Applicable to both US and Canada Subject: US Citizen living in Canada - Didn't know I had to file a US tax return. What now? Expert: taxman at centa.com Date: Monday August 21, 2006 Time: 01:42 PM -0700 QUESTION: I am a US citizen who immigrated and was naturalized in Canada a number of years ago. I maintain dual citizenship, but have not lived in the US for any length of time since I emigrated. Very recently, I was surprised to learn that US citizens are required to file US tax returns every year, even while they are living overseas. Honestly, I had no idea, and stood absolutely nothing to gain by not filing (my yearly income has always been well below the $80,000 exemption). Moreover, the penalties sound absolutely bankrupting. My question is: what should I do now? Should I just start submitting my old tax forms, contact the IRS and beg for mercy, or what? Thanks for your help. ------------------------------------------ david ingram replies: You should file back 6 years. If you have Canadian RRSP accounts, you have to be sure to file form 8891 for each account - http://www.irs.gov/pub/irs-pdf/f8891.pdf And if all the accounts you have are over $10,000 combined, you have to fill out form TDF 90-22.1 for each and every Canadian or Ethiopian account including the RRSP accounts and any account you are a joint signer on such as an account with your mother, sister or Girl Guide leader account. Read the fine print at the bottom of form TD-F.90-22 for up tp $500,000 fine. http://www.irs.gov/pub/irs-fill/f9022-1.pdf So far, (knock on wood), I have not had a single client penalized when they came forward. I have seen people with tax bills in the $200,000 range when they have been "caught". I am available to do this for you. 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 10 PM 7 days a week Vancouver (LA) time - (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. 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