US Brokerage Account - Price /

My_question_is: Applicable to both US and Canada
Subject:        US Brokerage Account
Expert:         taxman at centa.com
Date:           Wednesday June 28, 2006
Time:           07:11 AM -0700
QUESTION:
I am Canadian my wife Bethany is American.  We live in Canada and my wife is
now a permanent resident of Canada.  We like to trade stocks with our
Canadian on-line brokerage but the costs are much higher than using a US
based brokerage.  Is there any reason why we couldn't/shouldn't open a US
based brokerage to  achieve much lower transaction costs ($10 vs $30 per
trade).  What are the tax/legal implications of using a US based brokerage.
I am considering using
TD Ameritrade, right now I use BMO Investorline.  We intend on moving back
to the US in about 4 years and am happy to invest in US dollars.
Thanks for your help.  Also, I am looking for a great resource to have my
wife's US individual income tax completed correctly.  Can you recommend a
firm in Canada.  What do they charge?
---------------------------------------------------------------
david ingram replies:
If the US based brokerage will take your account go for it.
However, if you are doing it as a joint account, there will be a difference
in the way you report the income./
You will not pay tax to the US on any US capital gains or interest received.
You will pay 15% tax to the US on any dividends received.  Your wife will
pay a maximum US tax of 10% on any interest and a maximum of 15% on any
dividends and proportional tax on  capital gains.
You will both then report the earnings on your Canadian returns and claim a
foreign tax credit on line 433 for any taxes you paid to the US.
I like to think that we are a great resource for US / Canada Income tax
returns although we are so late with a dozen right now, I sort of wonder.
Others you might deal with are Steve Katz in Vancouver, Gary Gauvin in
Garland, Texas, Steve Peters at KPMG in Halifax and Brad Howland Tax
Services in Victoria.
Phone consultations are $400 for 15 minutes to 50 minutes (professional
hour).
This is not intended to be definitive but in general I am quoting $800 to
$2,000 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you
lived in one country only - no self employment or rentals or capital gains -
you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 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.
$1,500 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
$2,000 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 a three or four slips and no capital gains, etc. for $125.00
up.
With a Rental for $300
A Business for $300 - Rental and business likely $400
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 $400 and up.
TDF 90-22.1 forms are $25 for the first and $10.00 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.
Just a guideline not etched in stone.
==========================
David Ingram gives expert income tax & immigration help to non-resident
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