Need manager if doing all work online from Canada? Arizona Hotel Rental Needs to charge hotel tax. Expert Income Tax help on cro

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XXXXX XXXX on Thursday, July 8, 2010 at 19:08:27

My_question_is: US-specific

question: Hello, this is a fantastic site!  Thank you so much for making your knowledge so accessible. 
I own a luxury furnished condo in Arizona and am going to rent out weekly. 

My plan is to advertise it on a rental site such as VRBO and to receive payment online while in Canada through a paypal account or by cheque.

I would have an American cleaning crew and someone on site to providing entry access (not me). 

Do I still need a manager for this work to keep myself out of trouble? Thank you



david ingram replies:

Whether you collect the money in Canada or the state of Washington or in Arizona, you must still collect the hotel transient tax since your rentals are for less than 29 days and are in the state of Arizona..  The State tax rate is 7.27% and the County also collects another tax
Scottsdale, for instance collects 5% hotel transient tax for a total tax you must collect 12.27%.

i.e. if you were to charge $1,000 for a week, you would need to collect $1,122.70 and remit the $122.70 to the Tax authorities on a monthly basis.

Do not ignore this.  If they catch up to you three years from now, you will be in deep deep doo doo.

I have seen a West Vancouver owner of A Hawaii Condo have the unit seized by the State of Hawaii for failure to file her GET returns for 14 years.

In addition to the transient tax, Scottsdale, for instance has another tax of 1.65% which applies to commercial properties or residential properties where the owner has more than 2 ordinary residential properties.  A transient condo rented by the week or day is generally considered a COMMERCIAL property.

Be careful with what you are doing.

In addition to the Arizona transient Hotel taxes, every year you will have to file a a US 1040NR with a schedule C and schedule 4562 to report the business income ---  A rental residential condo would be a Schedule E but a hotel room is a business.

You will also need to file an Arizona 140NR return and include a copy of the 1040NR with the 140NR,.

And then, you have to convert all the figures to Canadian Dollars and put them on your Canadian return on a Schedule 2025.

IF YOU PAID ANY TAX TO Arizona or the feds, you will have to include a copy of the 1040NR and the 140NR and Schedule C and 4562 with your Canadian return to claim the foreign tax credit on Canadian forms 2209 and 2036.

As described you do NOT need a rental manager although their services could be useful when it comes to dealing with a lot of factors and filing the Hotel Tax returns on a regular basis.

If your question was not answered fully or you wish to go further, I am available for individual consultations by phone or email or in person for $450 per professional hour. 

Please also note that we prepare Canadian, US, Australian, UK and New Zealand returns on a mail in, email, fax, snail mail or couriered basis. At any time, our clients are in 40 countries or more.  They have every occupation from nuclear Submarine captains to FedEx pilots to Major Bank officers to Politicians, Diplomats and border patrol officers.  My favourite, however, is a penguin catcher in Antarctica among others there..

If you 'really' only have a single question requiring a 'couple' of minutes, you can try phoning me for free as part of the following.

- For a quick free question

You might try calling Fred Snyder's radio program for an answer on a Sunday Morning.. 

Fred Snyder's  "IT'S YOUR MONEY" radio show. on CISL,  650 AM on the dial in Vancouver from 9 to 11:00 AM every Sunday  (604) 280-0650 or (877) 280-0650 - You can listen live from anywhere in the world at from anywhere in the world. click on the button in the top left hand corner.
You might try calling Fred Snyder's weekly radio programs for an answer. 
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