Tax question for new taxable resident of Canada - Expert Income Tax help on cross Border tax and immigration and divorce and RRS

xxxxxx wrote:

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xxxxxx on Sunday, February 21, 2010 at 11:50:01

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question: Hi: 
I moved to Canada last May from USA. I was wondering if anyone can refer me a good tax consultant who can help with the tax filing. I guess it is little complicated since I had worked in US and Canada last year.



david ingram replies:

I like to think that we would be that good tax consultant.  Half of our clients do not even live in Canada and connect with us by phone, fax, email, snail mail, and courier.

However, there are others who do what I do.  In the following list, Sonja, Gary and Steve Katz worked with me in the past.  I have met Brad but have not met or talked to (that I remember anyway) Steve in Halifax, Kevyn in Toronto or Len in Kelowna.  You will find their contact information at the end.

In the meantime, you should go to and read the October 1995 newsletter on the tax duties of a US citizen in Canada (or any other country). The newsletter is in the top left had corner box under Newsletters.



Hi Taxman,

Sorry to bother you but I saw on FACEBOOK that you are a income tax preparer. My parents are from British Columbia, Canada but reside in New York, USA now. My father is also a tax preparer for 48 yrs here in New York and I have spent the past 5 yrs working with him. I have a question for you that I am having a tough time to answer. We both cant figure it out. I am a dual citizen, USA/Canadian. I was born in Chicago but became a Canadian citizen last year because my parents were born there.
I have a job offer in Montreal to start in July(next month). my question is this. I have collected unemployment from the United States from January-July this year (roughly around 15,000.00 usd). I will have to file a USA income tax to pay my taxes on this. if I start to work in Canada in July and work July-December I will file my Canadian income tax to Canada and pay my Canadian taxes on my Canadian earned money. I am aware that i need to show the USA income I made to Canada, and show the Canadian income I made to USA. The question is, will I have to pay Canadian taxes on my 15,000.00 usd I made???? or pay USA taxes on the money I end up making in Canada for the second half of this yr? if so it would make sense for me to not move to Canada until January 1 which i don't want to do but would rather than having to pay extra taxes on my money. if you know the answer to this it would help me out a ton.

I understand foreign earned income needs to be reported and since I am a citizen of both countries and will have made money in both countries I need to show the total of the 2 countries earned income on both Canadian and usa taxes. But i would not think i will be double taxed that is basically my question, if I will be taxed on my USA unemployment in Canada it would not make sense for me to go to Canada to work until 2010.

Also, I understand there is a difference in Canada between citizen and resident. I will reside in Canada for work july-dec, so if this will affect my situation then I would stay in Boston until jan 1 2010.

Hope you can help,
david ingram replies:

Move whenever you want to. 

Thank you for the question which points out the problem that the general public has finding a tax consultant to deal with their cross border taxes.

>From now to Xmas, most of my practice will be spent fixing returns done by other preparers around North America for Canadians or Australians or New Zealanders or Brits  who have moved to the US or US people who moved to Canada from the US.

Good on you for recognizing the problems and writing. 

You should start off by reading my Oct 93 Newsletter on dual citizenship.  Then you should read the Oct 1995 newsletter on the US tax liabilities / duties of a US citizen (or green card holder) living in Canada (or France or Japan or Australia, etc.).  These two newsletters are in the top left hand box at  Then you should go to the second box down on the right hand side and read the US / Canada Income Tax Section.

That will give you some 50 pages to read on your situation.

Basically, however, you will need to. (forget about exchange here please - although you do need to calculate exchange on the actual returns)

1.   file a Canadian T1 return showing your date of entry into Canada and reporting your Canadian wages and a prorata share of any investment income you might have from the US.

If, for instance, you had $15,000 of earnings in the US and $12,000 worth of interest for the year from the US and came to Canada on or about August 1, and then earned $25,000 in Canada, and saved just about every cent in the Royal Bank of Canada in a zero interest checking account, you would file  returns as follows.

You would file a Canadian T1 return showing your date of entry into Canada as August 1 (this prorates your personal exemption amounts on Schedule 1 by the number of days you are here divided by 365 (non leap year) and taking that percentage of the approximately $10,000 of personal exemption amounts.

Your T1 would therefore have $25,000 of wages on line 101 and $5,000 of interest on Schedule 4 and line 121 of the return.  You would claim a foreign tax credit of  up to $500.00 on form T2209 to get credit for the up to $500.00 of tax you will have paid to the US on the interest.

1(a)   You will also have to file a Quebec tax return.

2.   File a US 1040 and report the $15,000 from the US and $25,000 from Canada as wages on line 7.

The $12,000 of interest would be next and you would now calculate the tax on the total after exemptions and standard deduction.

You would calculate the tax percentage on the $15,000, the $25,000, the $7,000  of interest while you were in the US and the $5,000 of interest received while in Canada.

You would claim a general foreign tax credit on form  1116 to claim the Fed and Prov taxes and CPP and EI taxes paid to Canada as a credit against the $25,000.  In addition, if it worked out that you had paid more than 10% tax to the US on your US tax return on the $5,000 earned after going to Canada, you would file a foreign tax credit form 1116 and check off "resourced by treaty" to bring the tax rate down to the 10% stated in Article XI  of the US Canad Income Tax Convention.

3.   Because you had saved all of your Canadian earnings and now had over $10,000 US in a foreign bank, you would answer YES to question 7 on schedule B and fill in form TDF 90-22.1.  The first year you would say "no" to question 8 but NEXT year you will be saying YES and filing US form 8891 to report the RRSP (a foreign trust) that you will likely purchase.

That's it for the free stuff.

If you are still confused, I will be charging you $450 CDN for a phone consultation.  If you do that, get your dad on the line at the same time.

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 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 for in person or if you are on the telephone 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.

IRS Circular 230 Disclosure:  To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.--

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. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at or  If you forward this message, this disclaimer must be included." -

I do not know anyone any better to prepare your US returns than this office.  I do know others that do the same thing with equal skills..  However, I am adamant that you should likely buy an hour of my time before you get yourself caught up in a tax box with the US and Canada.  My number for a phone consultation is (604) 980-0321.  Peter or I can make the appointment.

The following are others whom I recommend for US / Canada tax preparation if you have a reason to deal elsewhere and there are lots of those. 
1.   You may have a fellow employee, your ex wife, or brother who already deals here and you want to be sure that there is no criss-cross of information.
2.   You may be thinking of separating from your present wife and she has said she is going to send her work here, or
3.   You do not like phoning anyone in Vancouver.

The following in this question about choosing and accountant are all well qualified to deal with you



What should I look for in finding an accountant who can do my Canada/US taxes? I'm a Canadian working in the US under a TN visa.

david ingram replies:

1.   Pick your accountant as soon as possible. Pick one that advertise that they are dual country accountants.  I am giving a list after this.

2.   Do not expect a 'free" exploratory visit.  We do not have enough time and anyone any good in the business was turning people down in April and June.

If you want to talk to me first, I call that a tax consultation.  I charge a minimum of $450.00 for your exploratory visit or consultation. If you then decide to hire me to do the returns, do not ask if I credit the consultation toward the preparation fee.  The answer is NO.  If you are doing a consultation, do it in November when there is time to sort things out before Dec 31st.

You can get a free bit of consultation by just hiring us to do the return and asking questions while it is being prepared. 

3.    Here are some questions to ask.

On the US side: 

a.    What is a Dual Status Return?  can a dual status return be A JOINT RETURN? If they have to look it up, do NOT deal with them.
b.   What is a dual status statement? 

c.    If you have rented your house out in Canada, what is the difference in depreciation methods.

d.   What is form 8891 -

e.   What is form TDF 90-22.1 - What is the penalty

f.   When do you have to file Schedule B?  Hint, if you have 'any' foreign financial account in any country, you have to file schedule B even if there were no earnings on that account and answer questions 7 and 8 on the bottom.

g.   If you have a corporation on either side of the border, ask about forms 5471 and 5472.

On the Canadian Side

1.   What is a departing Canada return?

2.   What is a factual resident?

3.   What is a deemed resident?

4.   What is form T1135?  (what is the fine for not filing on time)  If they have to look it up?  You do not want to deal with them.

5.   What is form T1161?  What is the penalty for not filing on time?  If they have to look it up?  You do not want to deal with them.

6.   What is form T1243?, ditto

7.   What is form T1244?, ditto

8.   How is your house taxed when you move back in if you return to Canada?

9.    Does section 45(2) apply  (No, it does not it can NOT be used if you are a non-resident).  How does Section 45(3) apply  (It does not if you claim CCA while out of the country)

10.   How long is your Provincial medical coverage good for?

11.   What happens to your Home Buyers Plan when you depart Canada.  (it is all taxable on that final return if not paid back within 60 days of leaving the country.).

This should help.  Just remember.  If a corporation is involved, you need someone who understands the question and can answer each one without 'research' or 'looking it up'.

If no corporations are involved, they do not need to know about forms 5471 and 5472.
If you are on a TN or H visa, this should be your bill.

If you are on an L visa, your company should pick up the tab.
The following are capable of looking after your returns if you do not want to send them here.

For the record, I have never met or even talked to Kevin Nightingale, Mark Serbinski,Steve Peters or Len Vandenberg that I know of or remember.  I have met and talked to Brad Howland in his home office in Victoria. .  Sonja Clarke, Steve Katz and Gary Gauvin all worked with me in my offices in the past.
The following was the answer to someone who was in need of an accountant to look after a cross border corporation. 

HINT one.

You should only use a December 31 year end for the Canadian company because the US 5471 forms will be much cheaper if you are set up as a Dec 31st year end.  By the way, failure to file the 5471 forms is a minimum penalty of $10,000 for the first 90 days and $10,000 every 30 days thereafter to a maximum of $50,000 a year per shareholder of the Canadian company.

In addition the Canadian Company will also likely end up with more than $10,000 in its account at some time and that necessitates the filing of form TDF 90-22.1 which has a minimum fine of $10,000 to a maximum fine of $500,000 plus up to 5 years in jail for failure to file.

Hint two.

When you are trying to find an accountant on either side of the border, start off by asking them what the rules are for when a 5471 and a TDF 90-22.1 have to be filed.  If they can not answer immediately, then you do not want to be their guinea pig. Now, it will be likely that the person who answers the phone does not know so do not ask them so that they can write it down, say no one is available and then have someone else phone you back after getting a chance to look up the answers.
Save the questions for the actual tax person.

Hint three.  

I would forget about the corporation unless you know it is going to make you a fortune.  It 'reallllly' complicates your life!  there is no way that being the president of a non-resident CANADIAN corporation is worth the hassles unless it is making you $100,000 a year or more in my opinion.

But you still have the corporation.

Some hints to get them done. Who could look after you?

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 three 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 at (902) 492-6011

OR    Kevin Nightingale in Toronto at (416) 733-9595

OR   Mark Serbinski in Toronto at (416) 733-0300

OR     Len Vandenberg with BDO Dunwoody in Kelowna, BC. at (250) 763-7600

OR    Steve Katz in Vancouver at (604) 732-1515

OR   Sonja Clark in West Vancouver at (604) 913-3376

OR   Brad Howland in Victoria at (250) 598-6258

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 29, 2008, 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. (and of course, it would not be right to leave it three.  - a month later I was in total pain with some sort of abscess  and Dr Ed Clarke fixed it 'just like that' but it took three visits.  One to do a quick fix. Two to do a root canal through a cap and three to seal it in forever.

Good luck with your tax return AND your teeth and that is my last hint.

You would not go to the dentist without your teeth.  Do not leave stuff behind when you visit your tax consultant.

Take your copies AND the assessments.  Better to have a suitcase full of stuff you might need and do not then to leave stuff behind.  Not taking it all the first time can end you up costing you twice as much for our fees.  All we have to sell is our time.



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Authored by: Anonymous on Sunday, March 28 2010 @ 10:42 AM PDT Pension from USA

Hello getting small pension from the USA they withheld 15 percent tax. Can I claim that as a foreign tax credit without having to fill out a 1040NR?

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