Dual Citizen working in US, living in Canada, -


QUESTION:

I'm thinking about working in the US and commuting from my Vancouver (Canada) home. Perhaps renting in US and coming home (Canada)on weekends.I hold both US and Canadian citizenship and understand the tax ramifications when working/living in Canada as a US citizen but what about working in US and living in Canada? Should I use the US passport at border both ways or Canadian?


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david ingram replies:

You show your US passport entering the US and your Canadian passport coming back to Canada. You have to sleep in BC 183 nights to keep your BC medical alive.

You will pay the US tax first and then claim a foreign tax credit in Canada for any Federal and state tax you pay plus the Social Security and Medicare taxes you  will pay as an employee.

This older question might help
QUESTION:
 
Good day,
 
You have undoubtedly been asked this question on numerous occasions.  My wife works in the United States, but we reside in Canada.  She recently has become a permanent resident in Canada, but has yet to receive a SIN.  We know she must file a tax return in Canada (under the deemed resident statute) however since she does not earn an income in Canada, and her salary is in US$ what amounts do we fill on her Canadian income return??  Can my salary (which is less than hers) somehow be applied on her return as well??  Does she as well get a 2 month extension on her US return date in order to file her Canadian return??
 
Thank you for your time a nd consideration.
 
Best regards,
 ____________________________________________________
 
david ingram replies:
 
If you are commuting to work in the USA, you must file a US tax return first and then refile the same amounts in Canada.  You would convert the US earnings to Canadian dollars and put the amount on lines 104 (not 130) and 433 (schedule 1) of your Canadian T1 return.  You then claim the Federal tax, State tax, FICA (social security) and Medicare  paid to the US as a foreign tax credit on line 431 of your Canadian return after filling in form T2209.  If there is anything left over you can apply it as a provincial foreign tax credit on line 48 of provincial form 428 after filling in form T2036.  (If you are in Quebec, You would use Quebec form TP-772-V to calculate and put the credit on line 409 of your TP1.
 
 She should file US form 4868 to extend her time to file the US return which is due at midnight April 17th otherwise and, of course, her Canadian in due April 30th.
 
You know where we are if you need help.
 
She will get a little more by going to
www.centa.com and reading the US/Canada Taxation section in the second box down on the right hand side.  She should also read the Oct 93 (dual citizenship) and Oct 95 newsletters in the top left hand box.
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Hello,
 
I'm a US citizen and live in Canada (permanent resident).  This past year I took a job working in Point Roberts WA.  I'm married to a Cdn citizen.  If my status is married, filing separately, do I have to include my husband's Canadian income on my US tax return?  Are there separate tax forms for US citizens living outside of the US?  Should I use my US address to file?  Or (since I live in Canada) should I be using my Canadian address?
 
Any information you can provide will be greatly appreciated!
 
Thanks,
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david ingram replies:

You will file your US tax return on a US 1040 as MFS OR, if you have children, you can file as Head of Household.  You do not need to include his income or take it into account in any manner.  in fact, if none of it comes from the USA, you can claim him as a dependent even if he earned $1,000,000.

Then, after calculating the tax actually paid (not what was deducted), you will report the US income again on a Canadian T1 return and claim the total of tax paid + Social Security (FICA) + Medicare as a foreign tax credit on  line 431 of Canadian Schedule T2209 and put the result on line 405  of  Schedule 1 of your T1.  If there is anything left over (there will be usually), the excess goes on line 3 of form T2036 and the result on line 49 of your Provincial form 428 (a bit different for the province of Quebec).

Use your Canadian Address, that's where you live.

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SUGGESTED PRICE GUIDELINES - May 17, 2008

david ingram's US / Canada Services
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My Home office is at:
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pert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
 
Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST for in person or if you are on the telephone in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing 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 one rental
 
$1,300 would be the same with one business no rental
 
$1,300 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.
 
$1,600 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

$1,700 would be for two people with income from two countries

$3,000 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 two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
A Business for $400 - Rental and business likely $550 to $700
 
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 $900 and up.
 
TDF 90-22.1 forms are $50 for the first 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 - (maybe amalgamate 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 the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
 





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