david ingram's US/Canadian Newsletter March 1997
REGAL CAPITAL PLANNERS is Canada's largest independent fund distributor.
CEN-TA prepares U.S. and Canadian tax returns & gives advice
Taxation based upon where you work, not where you live Page 223
MORTGAGE INTEREST AS A DEDUCTION IN CANADA PAGE 224
DID YOU KNOW? -- TAXATION IS BASED UPON WHERE YOU WORK, NOT WHERE YOU LIVE.
Canadians performing services in the United States and in 43 of the states in particular are required to file the respective state return(s) and a U.S. federal 1040NR or 1040 income tax return, even if their remuneration was paid from Canada. This applies, but is not limited to:
* Executives attending meetings in the USA and in particular, California,
* Service technicians servicing Canadian products under warranty,
* Salespeople selling Canadian products in the USA,
* Journalists (for instance covering the LA riots or O J Simpson trial),
* Horse trainers, race car mechanics.
* The above are exempt from tax up to $10,000 but must file returns to prove their exemption per Article XV. Over $10,000, taxation depends on where the employer gets its ultimate tax deduction for the wages paid out. If you are in the U.S. more than 183 days, you are taxable on world income.
** Entertainers, actors, musicians, performers,
** Professional athletes, race car drivers, jockeys.
** The above are exempt from tax up to $15,000 but still have to file the return to prove their exemption under Article XVI.
*** Transport Employees, Truckers, Flight Attendants, Pilots.
*** Transportation employees are exempt from tax in most cases even if in the USA for more than 183 days, if they are exercising their regular employment. They must, however, file the tax return to exempt the income.
With Chartered Accountants, U.S. Lawyers, and U.S. CPA's as associates, I feel that the CEN-TA Group has the experience and the qualifications to look after most, if not all, US / Canadian tax problems.
Contact George Hatton, Sonja Clark, D'Arcy von Schleinitz, or David Ingram for US and CANADIAN INCOME TAX PREPARATION and CONSULTATION.
MORTGAGE INTEREST AS A DEDUCTION
People usually think that Americans have it all because they can deduct their mortgage interest and property tax on their income tax return. This is true. They can make these deductions but to do so, most families give up a $6,000 standard deduction. This is fine if your mortgage interest is $30,000, but the practical fact is that 90% of mortgages in the U.S. are $50,000 or less and interest on $50,000 isn't enough to justify giving up the standard deduction.
In addition, Americans PAY TAX ON THE PROFIT when they sell their principal residence. (There is a limited once in a lifetime "up to $125,000" exemption for those 55 and over and you can roll over the profit into the next house provided it is of equal or greater value.)
The US deductions are not free. There is a future potential tax liability. The house profit is taxable even if you did not claim the deductions.
Canadians, DO NOT PAY TAX on profits from the sale of the family home. AND, Canadians can re-arrange their affairs to make their mortgage deductible.
CEN-TA Cross Border Services - Tax, Visas, Immigration