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Dear Mr. Ingram,
Hello! I came across your name on centa.com. I'm hoping you can
help me. I am Canadian (from Victoria) working as a nurse in
California. In 2002, I did not earn a cent in Canada, but 100% of
my income was made in the US. I did keep an apartment in Victoria
for about 8 months, and concurrently kept an apartment in
California for 4 months. I filed Canadian taxes and no US taxes
(although US taxes were deducted from my paycheque). Now I have a
US accountant about to start working on this, but she isn't
familiar with cross boarder issues.
Yesterday, I received a letter from Revenue Canada stating that I
owe them $4500 (which strangely enough is the amount of tax
withheld on my W2's). I feel as if I am being double taxed.
That letter, by the way, was dated Dec. 15/03, but the envelope
was postmarked March 15/04, and I was already charged over $200
in arrears interest even though it is my first "bill".
Can you recommend where I should go from here? Should I be seeing
an accountant here? Can I work with you via the internet? If so,
what is your fee structure?
Thank you for your help,
Sincerely,
- -------------------------------------------------
david ingram replies:
At the risk of sounding commercial, you shouldn't be dealing with
an accountant who is not familiar with cross border issues.
You should pack it all up and send it to our office.
Our charge to fix 2002 and do 2003 would likely be in the $1,000
> $1,200 Canadian range but it would be done right. And I charge
more for talking about it (consulting) than I do for doing.
Your first tax liability for 2002 was to the US and you should
have filed a US tax return before a Canadian one. You should not
have been taxed in Canada from what you have told me. Whomever
did your Canadian Return did not understand Article IV of the US
Canada Income Tax Treaty.
You should have filed as a departing resident of Canada for 2002.
Article IV - Fiscal Domicile - (it is the same number in most
treaties)
For the purposes of this Convention, the term "resident of a
Contracting State" means any person who, under the law of that
State, is liable to taxation therein by reason of that person's
domicile, residence, citizenship, place of management, place of
incorporation or any other criterion of a similar nature, but in
the case of an estate or trust, only to the extent that income
derived by the estate or trust is liable to tax in that State,
either in its hands or in the hands of its beneficiaries. For the
purposes of this paragraph, a person who is not a resident of
Canada under this paragraph and who is a United States citizen or
alien admitted to the United States for permanent residence (a
"green card" holder) is a resident of the United States only if
the individual has a substantial presence, permanent home or
habitual abode in the United states and that individual's
personal and economic relations are closer to the United states
than any other third State. The term "resident" of a Contracting
State is understood to include:
(a) the Government of that State or a political subdivision or
local authority thereof or any agency or instrumentality of any
such government, subdivision or authority, and
(b) (i) A trust, organization or other arrangement that is
operated exclusively to administer or provide pension, retirement
or employee benefits, and
(ii) A not-for-profit organization that was constituted in
that State, and that is, by reason of its nature as such,
generally exempt from income taxation in that State.
2. Where by reason of the provisions of paragraph 1 an individual
is a resident of both Contracting States, then his status shall
be determined as follows:
(a) he shall be deemed to be a resident of the Contracting State
in which he has a permanent home available to him. If he has a
permanent home available to him in both Contracting States, he
shall be deemed to be a resident of the Contracting State with
which his personal and economic relations are closer (centre of
vital interests);
(b) if the Contracting State in which he has his centre of vital
interests cannot be determined, or if he has not a permanent home
available to him in either Contracting State, he shall be deemed
to be a resident of the Contracting State in which he has an
habitual abode;
(c) if he has an habitual abode in both Contracting States or in
neither of them, he shall be deemed to be a resident of the
Contracting State of which he is a national;
(d) if he is a national of both Contracting States or of neither
of them, the competent authorities of the Contracting States
shall settle the question by mutual agreement.
-------------------
If you read this right, you were not taxable in Canada in 2002.
You WERE taxable in the US.
Answers to this and other similar questions can be obtained free
on Air every Sunday morning.
Starting this Sunday at 9:00 AM on 600AM in Vancouver, Fred
Snyder of Cartier Partners and I, David Ingram will be hosting
an INFOMERCIAL but LIVE talk show called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the
internet at
www.600AM.com
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321
New email to [email protected]
www.centa.com www.david-ingram.com
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
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