US Gov't employee living in Canada - CAPITAL GAINS PAID TO CANADA AND US - David Ingram gives expert income tax & immigratio
Subject: CAPITAL
GAINS PAID TO CANADA AND
US
Expert:
[email protected]
Date:
Saturday February 10,
2007
Time: 09:18
AM -0500
QUESTION:
SIR,
I AM A US CITIZEN CURRENTLY
EMPLOYED FOR THE US GOVERNMENT AND HAVE BEEN ASSIGNED TEMPORARLY IN CANADA UNDER
THE PRECLEARANCE ACT OF 1972. I AM WORKING AS A PRECLEARANCE OFFICER ON A
WORK AUTHORIZATION FOR A FOREIGN GOVERNMENT.
THE US GOVERNMENT PROVIDES
ITS EMPLOYEE WITH A FOREIGN LIVING QUARTERS ALLOWANCE WHICH IS
NON-TAXABLE.
I RESIDE IN A HOME WHICH I PURCHASED IN CANADA.
MY
QUESTION IS? AFTER MY TOUR ENDS AM I SUBJECT TO CAPITAL GAINS IN BOTH
COUNTRIES.
I PAY TAX IN THE US.
THANK
YOU,
-----------------------------------------------
david ingram
replies:
Your earnings or
wages are tax free in Canada under Article XIX of the US / Canada
Income Tax Convention (Treaty). However, you are a legal resident of
Canada and can apply for an receive provincial medical benefits, your kids can
go to school and everything is the same as for a Canadian citizen or PR
(permanent resident).
You should file an annual Canadian Income Tax
return and report the US income on line 104 of the Canadian return and then
deduct every cent on line 256 under Article XIX of the Tax Treaty.
As a
resident of Canada, any profit on your personal home is tax
free.
As a US citizen, you are allowed up to $250,000 US profit per
person if you have lived in the house for 24 out of the last 60
months.
The following older Q & A may give you some other
ideas.
My_question_is: Applicable to both US and
Canada
Subject: Canadian Government
Employee living in US, working in
Canada
Expert:
[email protected]
Date:
Tuesday January 30,
2007
Time: 03:11
PM -0500
QUESTION:
I am a Canadian government employee who works
in Canada. I am applying for permanent resident status in the US, and will be
moving there shortly. I was wondering what me tax obligations would be to either
countries. I was told that as a government employee, I would not have to pay the
US tax since my income comes from the Canadian government and the US has a tax
treaty with Canada stating that each other cannot collect tax from the
governments of the other country. I would like to know all the information
before I make my move. I do not own any property or investments in Canada, but I
plan on keeping a Canadian bank account, as that is where my paycheque will go.
I will have to cancel my health insurance and transfer my car over. Thanks you
for any help on the situation.
-------------------------------
david
ingram replies:
Article XIX of the US/Canada Income Tax Treaty exempts an
employee of the Canadian Federal Government from paying tax to the US government
on their government paycheque when the Canadian lives in the US for any reason
and the same situation applies in reverse.
For instance, a female US
citizen working as a US border guard and living in Canada with her Canadian
husband and three Canadian born children does NOT pay one cent of tax to Canada
on her US Homeland Security income. She qualifies for BC Medical and will
even qualify for a Canadian old age pension at 65 but does not pay tax on her US
government income. However, any interest, dividends, capital gains or
rentals or author's royalties ARE taxed by
Canada.
---------------------
This is the actual treaty
article
Article XIX
Government Service
Remuneration, other than a
pension, paid by a Contracting State or a political subdivision or local
authority thereof to a citizen of that State in respect of services rendered in
the discharge of functions of a governmental nature shall be taxable only in
that State. However, the provisions of Article XIV (Independent Personal
Services), XV (Dependent Personal Services) or XVI (Artistes and Athletes), as
the case may be, shall apply, and the preceding sentence shall not apply, to
remuneration paid in respect of services rendered in connection with a trade or
business carried on by a Contracting State or a political subdivision or local
authority
thereof
--------------------------------------------
----------------------------------------
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)
email to [email protected]
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www.david-ingram.com
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