My_question_is: Applicable to both US and Canada Subject: US Brokerage Account Expert: taxman at centa.com Date: Wednesday June 28, 2006 Time: 07:11 AM -0700 QUESTION: I am Canadian my wife Bethany is American. We live in Canada and my wife is now a permanent resident of Canada. We like to trade stocks with our Canadian on-line brokerage but the costs are much higher than using a US based brokerage. Is there any reason why we couldn't/shouldn't open a US based brokerage to achieve much lower transaction costs ($10 vs $30 per trade). What are the tax/legal implications of using a US based brokerage. I am considering using TD Ameritrade, right now I use BMO Investorline. We intend on moving back to the US in about 4 years and am happy to invest in US dollars. Thanks for your help. Also, I am looking for a great resource to have my wife's US individual income tax completed correctly. Can you recommend a firm in Canada. What do they charge? --------------------------------------------------------------- david ingram replies: If the US based brokerage will take your account go for it. However, if you are doing it as a joint account, there will be a difference in the way you report the income./ You will not pay tax to the US on any US capital gains or interest received. You will pay 15% tax to the US on any dividends received. Your wife will pay a maximum US tax of 10% on any interest and a maximum of 15% on any dividends and proportional tax on capital gains. You will both then report the earnings on your Canadian returns and claim a foreign tax credit on line 433 for any taxes you paid to the US. I like to think that we are a great resource for US / Canada Income tax returns although we are so late with a dozen right now, I sort of wonder. Others you might deal with are Steve Katz in Vancouver, Gary Gauvin in Garland, Texas, Steve Peters at KPMG in Halifax and Brad Howland Tax Services in Victoria. Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). This is not intended to be definitive but in general I am quoting $800 to $2,000 for a dual country tax return. $800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year. $1,000 would be the same with one rental $1,200 would be the same with one business no rental $1,200 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. $1,500 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 $2,000 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 a three or four slips and no capital gains, etc. for $125.00 up. With a Rental for $300 A Business for $300 - Rental and business likely $400 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 $400 and up. TDF 90-22.1 forms are $25 for the first and $10.00 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. Just a guideline not etched in stone. ========================== David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Saudi Arabia to Mexico to China or Chile - Cross border, dual citizen - out of country investments are all handled with competence & authority. 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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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 A sample of the way I price follows.
