------------------------------------------------------------From: Andrew Reply_To: [email protected] My_question_is: Applicable to both US and Canada Subject: RRSP for US citizen working in Canada Expert: [email protected] Date: Tuesday May 06, 2008 Time: 09:17 PM -0000 QUESTION: I am wondering if it is possible (and if it is wise) to invest in an RRSP as a US citizen working temporarily in Canada. My goal is to achieve temporary and long term tax savings and to invest some for retirement. My concern is that the hassles of dealing with a Canadian retirement plan (assuming I return to the US) will not be worth the hassle. Also is there any reason I would not be allowed to contribute to an RRSP? On the CRA's "Quick Access" page, I was told my RRSP deduction limit for 2008 is zero. Could this be b/c I don't have tax withholdings?
david ingram replies:
I m not a fan of RRSP accounts although they do have their uses. You do not define temporary. If you are only in CANADA for a year and a half, forget it. If temporary means 30 years, you should likely consider it although i can show you mathematically that you are far better off paying down your mortgage with after tax dollars and using a leveraged loan to make your investment arrangements.
RRSP ROOM or the amount of money you can contribute to an RRSP is determined by LAST year's income. To contribute in 2008, you have to have had earned income in Canada in 2007. If you earned $10,000 in Canada when you came here in Dec 2007 and $120,000 in 2008, you could only put in approximately $1,800 to an RRSP in 2008 because your RRSP room for 2008 would be 18% of your net earned income for 2007 (net is after some deductions for union dues, etc. by the way) For 2009, 18% of $120,000 would be $21,600 but there is a statutory limit of
2007 $19,000
2008 $20,000
2009 $21,000
2010 $22,000
So you could only put in $21,000.
The amount is also limited by membership in a company pension plan
There are also other very stringent reporting rules for you with regard to any financial accounts. RRSP accounts have to be reported the IRS on form 8891. As soon as the balance of all your Canadian (or French, German, Iranian, etc) accounts exceeds $10,000 for even a second (maybe while buying a house or a car for instance), every account has to be reported to the Dept of the Treasury on forms T D F 90-22.1. Failure to file this form is now a minimum penalty of $10,000 and to make it clear, I have seen a 105 year old lady fined $10,000 for failure to file this form as far back as 1995.
I have no idea where you live. (your email address would indicate an asteroid) but if you (or anyone else) needs cross border financial management, you need to consult with someone who has done the paperwork to work with people on both sides of the border. We specialize in the preparation of cross border and dual country tax returns. If you need your US / Canadian returns prepared while in Canada, you should likely send them here.
At the same time, although i recommend several others who are my competitors for cross border taxes, I only know two at the moment who specialize in cross-border investing.
Read on.
Two ethical people who
specialize in selling securities, RRSPs, etc., to US citizens in Canada
or Canadians in the US are:
Dan Walkow
Seabank Financial
White Rock
Local (604) 541-9952
L D (866) 541-9952
www.seabankcapital.com
Dan Walkow
Seabank Financial
White Rock
Local (604) 541-9952
L D (866) 541-9952
www.seabankcapital.com
AND
Mr Darrell Thompson
Blackmont Securities
Toronto
Local (416) 874-8007
LD (866) 775-7704
www.blackmont.com
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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, both parties would welcome an exploratory call.
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As for other accountants.
Gary Gauvin is absolutely qualified to deal with you. He is an old business partner of mine from Ottawa. He now practices outside of Dallas Texas as a one or 1 1/2 person office. If you deal with Gary, you will deal with Gary. He is a US enrolled agent. You can find his website easily. Type - income Tax Expert - into
google. Gary will come up as number one or two. Why, because he is. If I am looking for a first or second opinion, I call Gary. Disadvantage - Gary is a one person office. Advantage - You will always get to talk to Gary.
Gary likes corporations. I and my four associates do not like them. I like dealing with individuals who deal cross-border withOUT corporations.
OR KPMG in Vancouver. The last time I checked they had 22 people in their US/Canada department. call (604) 691-3025. Advantage - Lots of Backup. Disadvantage - It will be hard to get the same person to deal with you three times in a row.
OR Steve Peters with KPMG in Halifax (902) 492-6011
OR Kevin Nightingale in Toronto (416) 733-9595
OR Len Vandenberg with BDO Dunwoody in Kelowna, BC. (250) 763-7600
OR Brad Howland in Victoria, BC at 250-6258
OR Steve Katz in Vancouver at (604) 732-1515
Whoever you choose, you would likely do well to consult with me for one or two hours a year. If I have a suggestion, it will be worth it. If I can't come up with anything, you will know that what you are doing is likely the best track. I will compare it to my dentist. When I went in the fall of 2005, I ended up with $16,000 to $18,000 of dental bills, a bunch of pain, and a lot of nice new caps, etc.
When I went for an inspection on Jan 29th, he could not find anything wrong except that I was not flossing. Which one did i appreciate more?
Well both - the first time was expensive but dealt with years of neglect. The second said I am on the right track.
Good luck.
SUGGESTED PRICE GUIDLELINES - April 26, 2008
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:
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.
$1,700 would be for two people with income from two countries
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.
Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files. As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files. It can take us a valuable hour or more to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance.
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
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.
pert 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. However, if
you have a stack of
1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an
average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or
T101 --- Income trusts with amounts in box 42 are an even larger
problem and will be more expensive. - i.e.
20 information slips will be
at least $350.00
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.
Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files. As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files. It can take us a valuable hour or more to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance.
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.
david
ingram expert US CANADA cross border non-resident income tax help and
preparation by five tax experts with years of experience with Canadian
and American and Mexican income tax
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