Dentist logic - DUAL STATUS (35b) Canadian on H1B moved to US same tax year - considered resident alien by IRS - what to file? -

href="http://www.quatloos.com/schneider_witmeyer_guilty.htm">http://www.quatloos.com/schneider_witmeyer_guilty.htmJust remember that this first year, your US 1040 either needs toinclude your Canadian income (before you moved to the US)  and a '2350and 2555' (to exempt the Canadian Income) or an 1116 (to claim aforeign tax credit)  OR be filed as a Dual Status preparer - see line35b top of page 2 of the 1040 and mark the top of Page One of thereturn as a DUAL STATUS RETURN.  In this situation, you also have tofile a 1040NR with DUAL STATUS STATEMENT on the top of Page one of the1040NR.  This 1040NR would be reporting any US source money youreceived BEFORE moving to the USA.

one more thig for you or anyone else reading this.  If you have 'ANY'foreign accounts (Canadian, French, Spanish, Japanese, Australian orany other of the 265 or so countries in the world) you MUST fill in USschedule B and answer the two questions at the bottom.  Your RRSP is aforeign trust and form 8891 replaces form 3520 for an RRSP.

Good Luck

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david ingam replies:

The phone consutlation is not part of the filing fee.  However, if youonly have a 1/2 hour consultation I do sort of blend it in. 

Being married to a wife who is in Canada for two months after marriageis NOT going to make you a taxable resident of Canada if it is clearthat she is on the way to join you in the US.

A more significant quote would be when we have all of theinformation.

david





On 3-Feb-08, at 10:09 PM, David Ingram wrote:

I'm a 27 year old Canadiancurrently living in the United States on an H1B. Before leaving CanadaI closed all major credit cards, bank accounts (except for one whichstill has an outstanding balance which will be paid off this year), andbrought all personal belongings with me. The only thing I've left inCanada which is giving me a tough time is ~60K  in RRSP's. I'vedetermined as per IRS publication 519 I am a resident alien for taxpurposes as per the substantial presence test. I've been consideringdoing the filing myself, but I'm confused as to whether or not I shouldbe declaring my RRSP's and if so, what are the implications? Especiallythis year since I've lost over 10%+ of their value.

I would like to use your services, but I would like some degree ofconfidence that by paying over 1K (moving year) that I will be reallysaving that much. I can understand someone who has complex taxsituations with properties, receiving retirement funds, capitalgains/losts, etc. My tax situation is pretty straight forward (I think)and aside from filing forms 1040, 8891 (maybe) in the US with someCanadian tax credits and in Canada file a T1 tax return (departing),I'm having a tough time seeing the value of your services. I'm hopingyou can convince me otherwise.

Any other year, I would only except to file in the US, but this one Idon't want to take a chance on.

Thanks for your help!


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david ingram replies;

I went to see my dentist Ed Clark the other day and $160 dollars laterwas told 'no cavities'.  I was very happy.  Last time I saw him becausea cap had split off the enamel - this is the truth - I ended up with a$16,000+  dental bill because he discovered a very hidden abcess andthen pointe out all my ground down teeth.

Although I like the appearance of my $16,000+ teeth and appreciate thefact that the abcess was fixed, etc. I was happier hearing 'nothingwrong but floss more' than I was with the litany of stuff wrong afternot being there for a few years.

I have no idea if our service would be worth it to you.

It is an intersting question.  You have mentioned the form 8891 whichis a new form.  Not filling it out can result in a penlty of 35% of thevalue of your RRSP PLUS 5% for each year you do not report it.  Beingin the US on an H1B requires the filing of form 8891 to report (andexempt) the internal earnings of your RRSP.  However, if you are inCalifornia, the 8891 does NOT exempt the internal earnings on your RRSPand the California Franchise Board taxes them requiring an adjustmenton form CA or CA(NR) with the 540 or 540NR.

You do not mention form TDF 90-22.1.  I was told by a representativefrom Treasury on June 20, 2007,  that their intention is to levy aminimum $10,000 fine for failure to file this form.  I had a 105 yearold client pay a $10,000 fine for failure to file it and over 1,000clients of a Vancouver financial consultant 'Jerome Schneider' werefined because he told them not to file the forms.  Jerome Schneider wassent to jail himself and fined $100,000 for telling them not to filethe forms.  That was a plea bargain where he agreed to testify againstall his clients and a couple of lawyers and accountants he had workedwith.  Without the plea bargain, his penalties were astronomicalbecause there were over 1,000 charges possible. 

If you want more info on Schneider, you can read the story at 
http://www.quatloos.com/schneider_witmeyer_guilty.htm
Just remember that this first year, your US 1040 either needs toinclude your Canadian income (before you moved to the US)  and a '2350and 2555' (to exempt the Canadian Income) or an 1116 (to claim aforeign tax credit)  OR be filed as a Dual Status preparer - see line35b top of page 2 of the 1040 and mark the top of Page One of thereturn as a DUAL STATUS RETURN.  In this situation, you also have tofile a 1040NR with DUAL STATUS STATEMENT on the top of Page one of the1040NR.  This 1040NR would be reporting any US source money youreceived BEFORE moving to the USA.

one more thig for you or anyone else reading this.  If you have 'ANY'foreign accounts (Canadian, French, Spanish, Japanese, Australian orany other of the 265 or so countries in the world) you MUST fill in USschedule B and answer the two questions at the bottom.  Your RRSP is aforeign trust and form 8891 replaces form 3520 for an RRSP.

Good Luck

-------------------------------
David Ingram wrote:

On January 29, 2008, DavidIngram wrote:

It is very unlikely that blind or unexpected email to me will beanswered.  I receive anywhere from 100 to 700  unsolicited emails a dayand usually answer anywhere from 2 to 20 if they are not from existingclients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject lineand get answered first.  I also refuse to be a slave to email and donot look at it every day and have never ever looked at it when I am outof town. 
e bankruptcy expert  US Canada Canadian American Mexican Income Tax  service and help
However, I regularly search for the words"PAYINGCUSTOMER" and always answer them first if they did not get spammed out.For the last two weeks, I have just found out that my own email notesto myself have been spammed out and as an example, as I wrote this onDec 25, 2007 since June 16th, my 'spammed out' box has 47,941 unreadmessages, my deleted box has 16645 I have actually looked at anddeleted and I have actually answered 1234 email questions for clientsand strangers without sending a bill.  I have also put aside 847messages that I am maybe going to try and answer because they lookinteresting. -e bankruptcy expert  US Canada Canadian American Mexican Income Tax service and  help
Therefore, if an email is not answered in 24 to48 hours, it is likely lost in space. You can try and resend it but if important AND YOU TRULY WANT OR NEEDAN ANSWER from 'me', you will have to phone to make an appointment. Gillian Bryan generally accepts appointment requests for me between10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, LosAngeles) time at (604) 980-0321.  david ingram expert US Canada Canadian American  Mexican Income Tax  service and help.
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Disclaimer: This question has been answered without detailed information orconsultation and is to be regarded only as general comment.   Nothingin this message is or should be construed as advice in any particularcircumstances. No contract exists between the reader and the author andany and all non-contractual duties are expressly denied. All readersshould obtain formal advice from a competent andappropriately qualified legal practitioner or tax specialist for experthelp, assistance, preparation, or consultation  in connection withpersonal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must beincluded." e bankruptcy expert  US Canada Canadian American Mexican Income Tax  service and help.
David Ingramgives expert income tax & immigration help to non-residentAmericans & Canadians from New York to California to Mexico family, estate, income trust trusts Cross border, dual citizen - out ofcountry investments are all handled with competence & authority.
 
Phone consultations are $450 for 15 minutes to 50minutes (professional hour). Please note that GST is added if productremains in Canada or is to be returned to Canada or a phoneconsultation is in Canada. ($472.50 with GST if in Canada) expert  US Canada Canadian American  MexicanIncome Tax  service and help.
This is not intended to be definitivebut in general I am quoting $900 to $3,000 for a dual country taxreturn.
$900 would be one T4 slip one W2 slipone or two interest slips and you lived in one country only (but werefiling 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 onerental
 
$1,300 would be the same with onebusiness no rental
 
$1,300 would be the minimum with amove in or out of the country. These are complicated because of theback and forth foreign tax credits. - The IRS says a foreign tax credittakes 1 hour and 53 minutes.
 
$1,600 would be the minimum with arental or two in the country you do not live in or a rental and abusiness 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 andyou 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 andno capital gains, etc. for $200.00 up.
 
With a Rental for $400, two or threerentals for $550 to $700 (i.e. $150 per rental) First year Rental -plus $250.
 
A Business for $400 - Rental andbusiness likely $550 to $700
 
And an American only (lives in the USwith no Canadian income or filing period) with about the same things inthe same range with a little bit more if there is a state return.
 
Moving in or out of the country orpart year earnings in the US will ALWAYS be $900 and up.
 
TDF 90-22.1 forms are $50 for thefirst 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 - (maybeamalgamate 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 theCanadian return as a guide for seven years at a time will be from $150to $600.00 per year depending upon numbers of bank accounts, RRSP's,existence of rental houses, self employment, etc. Note that thesereturns tend to be informational rather than taxable.  In fact, ifthere are children involved, we usually get refunds of $1,000 per childper year for 3 years.  We have done several catch-ups where the clienthas recieved as much as $6,000 back for an $1,800 bill and one recentlywith 6 children is resulting in over $12,000 refund. 

This is aguideline not etched in stone.  If you doyour own TDF-90 forms, it is to your advantage. However, if we put themin the first year, the computer carries them forward beautifully.
 
This from "ask an income trusts tax service andimmigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily basis with expatriate taxreturns with multi jurisdictional cross and trans border expatriateproblems  for the United States, Canada, Mexico, Great Britain, UnitedKingdom, 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, StVincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 stateswith state tax returns, etc. Rockwall, Dallas, San Antonio Houston,Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax andImmigration Tips, Income Tax  Immigration Wizard AntarcticaRwanda Guru  Consultant Specialist Section 216(4) 216(1) NR6 NR-6 NR 6Non-Resident Real Estate tax specialist expert preparer expatriate antimoney laundering money seasoning FINTRAC E677 E667 105 106TDF-90 Reporting $10,000 cross border transactions Grand Cayman ArubaZimbabwe South Africa Namibia help USA US Income Tax Convention. Adviceon bankruptcy  e bankruptcy expert  US Canada Canadian American Mexican Income Tax service and help .

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