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Necessary to file 1040NR? 8913


Hello.  The only US income we received for 2006 is interest from our bank accounts and our state refund from our 2005 taxes: 100% non-business income.  According to the 1040NR guide, if I understand this correctly, since we are Canadians (living in Canada), the bank interest is “generally” not taxable.

So, is it worth filing a return for so little money?  All told we have under 5K.

Reading further in the 1040NR tax guide, I saw that I could get greedy and also claim our mortgage interest, the long distance tax credit and even claim the child credit for our American born daughter, and potentially net us a nice refund check.

Again, is it worth it or could it come back to bite me later?  I have until June 15th, right, if I read the guide correctly?

Any advice is greatly appreciated.
david ingram replies:

To claim any part of the up to $1,000 refundable child tax credit for your daughter, you would have to be reporting earned income of over $11,300.  US citizens and green card holders living in Canada 'are' able to get up to $1,000 per child by reporting their Canadian earned income on their 1040 and claiming a foreign tax credit rather than using form 2555 to claim the earned income exemption.

And if you were living in the US from March 2003 to whatever, you could claim back part of the Long Distance Phone tax rebate by filling in form 8913 which makes the calculation in three month increments. 

Nothing should come back to bite you but I doubt if it is worth the time in your case.

However, we did a fellow's US  return with three kids today and $100,000 of Canadian  earnings and his Child Tax Credit for his three 'Canadian born' kids was $1,700.  He has not lived in the US for ten years and his kids havce never been there but are US citizens because of their father.

Note, that if we had claimed the 2555 exemption, there would not have been a refund.

And, if his income had been $75,000 or less, he would have received a $3,000 refund from the US.

I do not expect this situation to last long by the way but it is four years old now. �
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Losing Green Card

Hello,   I've read your website & articles & wanted to submit the following to "Ask an Expert", but I couldn't get past the non-secure sign-in that it wouldn't accept anyway:   I've read your forums about Canadians working for US companies remotely/virtually & residing in Canada.  One answer said, "If you are a Canadian without a green card, you do not have to file a US tax return."  What if you do have a green card? - my understanding is you have to surrender it.  Maybe the answer is still the same?  You file taxes with Revenue Canada? -----------------------------------------------------------------------
david ingram replies:

If you are a Canadian with a green card, you must continue to file US returns and report your world wide income to the USA.

You do not have to surrender it if you have filed form I-131 to keep it when you left and if you have continued to file your US returns, it is likely that you can keep the green card.  Although anecdotal, I have personally seen some 100 people come to Canda with their green cards, file their returns and then return without problems.  I have also seen an eqaul number have their green cards taken away.  ( one lady at the house today was in that position and now desparately wants to return but did not appeal the cards beeing taken away in time.

I have seen at least 20 people have their card taken away and get it back on appeal.

There are no absolutes.

In either case, if you are living and working in Canada, your tax is owed to Canada first.  Usually, paying canada first will generate enough foreign tax credit that you will NOT be taxed in the US. �
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Capital gains

1.    Can you sell your principal residence and then claim your recreational property as principal residence (both Canadian)?  If so, what are the capital gains implications if you then sell your recreational property (which is now your principal residence)?

Obviously, you can't go around claiming principal residence and then selling property after property without being noticed.

2.    Is there a time frame that you need to inhabit this recreational property to allow for a sale as a principal residence?

3.    Is the entire amount of increased value (purchase price to today's worth) sheltered from CG or just the portion from the day you declare the recreational property to be your principal residence?

4.    Is there a limit of land size when claiming principal residence?  I heard there was a limit of 1 acre of principal residence being sheltered from capital gains unless you can prove the necessity of the remaining land base (i.e. access to the dwelling).

5.    What are your rates for service?  Counsel for Capital Gains management  (recreational and principal residence) so that the heirs aren't left with a tax burden that forces the sale of the recreational property.


david ingram replies:

1.   yes but not for the same time period.  See form T2091 to see how the CRA looks after this

2.   no and yes.  It can only be designated for the time that you did not designate the other house

3.   just the portion you declare.

4.   the limit is 1/2 hectare which is 1.22 acres.  If the land can NOT be subdivided because of zoning or other laws which require 4 acres for a septic field (as an example), then the whole piece might be allowed.  Goto  and read the capital gains section in the TAX GUIDE which you will find in the top left hand box  for some examples.

5.    fees are stated in the following missive.
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How does a Canadian Citizen apply for a Green Card?

My husband and I are Canadian Citizens. I recall hearing years ago that we could make an application for a Green Card for a certain fee and that in 10 -15 years, subject to meeting US entry requirements, our "number" would come up. My understanding was that the US will grant so many applications per year to Canadians.

Alternatively, I am self employed, work from home and could operate my business out of a home in the US. I read through your extensive Visa pages (thank you) but did not recall seeing anything that would enable me to start a business in the US, and then live there as a result. In this case, my husband would commute to his job in Canada.

Thank you and regards,

david ingram replies:

If you had applied 14 or 15 years ago, your number ,might be coming up about now.  There is no guarantee of a time in the future.

E-2 Visa - You can open a business in the US and get an E-2 visa to live and work there.  If you apply on the side for your green card, it might come up in the future.  Goto and read the Jan, 1995 newsletter written by Dennis Olsen (former US consul in Vancouver) about the E2 rules which are essentially the same and maybe a litle easier today.

E-5 Visa - If you have $500,000 US, you can open a busioness in Whatcom County (Bellingham for instance), hire 10 people and get an instant Green card which becomes final in two years if you fulfill all the conditions.

E-5 Visa - With $1,000,000 you can open in LA or San Francisco or New York, etc. and get am instant green card.

GOTO and read the 'Entering the USA'  section in the second box down on the right hand side. �
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Sleep Overs - no not 'that' kind

Hello David,

You've had much discussion over sleeping in countries and how it may effect your residency status. In reviewing Form N-400 application for US citizenship it asks in Part 7. Time Outside the United States, on the total number of days you've spent outside the US, in a 24 hour period. This being the case, I would think you could make your crossing, turn around and return to Canada immediately, thus never being away for more than 24 hours. What's your take? ------------------------------------------------------------------------------------
david ingram replies:

As a rule, where you sleep is where you live for tax and immigrration purposes.

Those who are working in the US on H1 or L1 visas can get them extended past their normal life span where they can show that they are living in canda and commuting to work in the US.  I.E., if yo go down to the US on Monsay morning and come back Friday night and spend Friday, Sat and Sunday nights in Canada, Homeland Security will issue another 3/7ths of visa time.

Working 16 hours a day in the US and sleeping 8 in Canada does not count as time in the US for citizenship purposes as I understand it but someone may disagree with me and comment further.
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Contract income while on TN Visa

I am a Canadian working in the US on a TN VISA.   Am I allowed to do contract work for Canadian companies for projects in Canada on a telecommute basis while on a US TN VISA?

If not, can a person living in the US on a F1 dependant VISA have Canadian income and file CDN Tax returns?

david ingram replies:

If a person is living in the US and telecomuting back to canda that is legal under US immigration law becasue they are not takig a job away from an American.  They are NOT taxable in Canada on that income because the work is not being done in Canada. 

They are taxable in the US and should file a Schedule C to report the income and pay tax, etc on a US 1040.

I have had dozens of clients in this position and no one has ever had a problem with the IRS or Homeland Security.  Just make sure that nothing is done for a US person or company,

If the Canadian employer insisted on paying you with a T4 and deducting tax, etc., you would file a Canadian return and ask for the tax back.  If you were actually going to Canada for a week a month and performing some of the job's duties 'in' Canda, you would then be paying some tax to Canada and claiming a foreign tax credit on US form 1116 as part of the US 1040.
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RRSP deduction limit


I am full time employed, where the employee has a defined benefit plan. I also am self-employed where my business had a loss.

As a result this reduces my overall income (18%  of 2006).

For e.g. Employment income 100k and Total income 35K (65k self employment loss).

During the year 2006 I was able to get away barely on tax on excess contributions. I am however concerned in 2007 if this could be an issue.

What are my options?
What is the optimal solution?

david ingram replies:

You are only allowed to put up to $2,000 extra into an RRSP.  If you put more than $2,000 over the allowable calculated 'room', the penalty is 1% per month.  rental and business losses take away fromthe room and is the best reason I know for NOT making monthly RRSP payments.

The CRA is finally using their computer to track down people with excess RRSP contributions and sending out demand letters for an accouinting.  Going back 10 years, it is not unusual to come up with $10,000 worth of penalties althought he old rules were that you could have $8,000 in excess.  One fellow I know of kept on buying the amount he was 'over' every year until it caught up with him.

The smart option is to withdraw any excess contributions by filling in form T3012 -

You are likely better off without an RRSP anyway.  Consider paying down your mortgage and using a leveraged account to make the investment you might have made in an RRSP. �
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Canadian RRSP Impacts for Cdn living in U.S. - Dan Walkow, Seabank Capital, Darrell Thompson, Blackmont Securities


I have been living in the U.S. for 8.5 years now and have recently moved to Chicago from California.  We have a significant amount of $$ in Canadian RRSP's of which over half is in a mutual fund that has excessively high fees.  I have wanted to rebalance my RRSP and move money from one mutual fund into one or more different ones, all of course remaining within the RRSP.  I am told that at leat with respect to California who don't recognize the Cdn/US free trade tax treaty, that that would trigger significant California tax on any and all gains including those gained before I ever moved to the U.S.?!?!?  Now that I have moved to Illinois, do I have flexibility to move money within my RRSP or am I still stuck.   My broker in Canada isn't even sure if he is allowed to execute the trade.

david ingram replies:

I am so busy that you are the only question answered for the last couple of days out of about 300 received in the last couple of days.

While you were in California, the internal earnings of your Canadian RRSP accouts were taxable on your California tax returns.  California is the only state that does not recognize the Federal exemptions when claimed.

To claim the federal exemptions, you need to fill in form 8891. Don;t forget that youalso need to fill in forms TDF 90-22.1 as well to avoid the possibility of an up to $500,000 fine plus five years in jail;.  (see the bottome two questions on schedule B of your 1040)

Your broker can NOT likely move the contents of your RRSP.  You need someone like Darrel Thompson or Dan Walkow as follows from an older reply: -----------------------------------
QUESTION: 1. have been trying to find ethical investment firm to go with in Canada and can not seem to get any unbiased answers We live in Red Lake Ontario (landed immigrants), but are also US citizens

2. Is this Stansberry & Associates legit, as they seem to have many different opportunities claiming great returns
Pinchot Retirement Plan,  Master Limited Partnership, Market Index Target Term Security , Oakmark Select Funds
Thanks greatly looking forward to your email

--------------------------------------------------------------------------- david ingram replies:
I have no good or bad knowledge about Stansbery and Associates. None of my clients deal with them to my knowledge.

From looking at their website, they seem to be a newsletter operation as mucyh as anything.  I have about 15 interviews with newsletter writers on gold (John Embry), oil, uranium (Martin Kafusa), silver (Sean Rahkimov) real estate (Ozzie Jurock), futures and commodities (Victor Adai), Resources in General (Elsworth Dickson, Publisher of Resource World)  etc at - mostly in the third column.

Two ethical people who specialize in selling securities, RRSPs, etc., to US citizens in Canada or Canadians in the US  are:

Mr Darrell Thompson
Blackmont Securities
Local    (416) 874-8007
LD        (866) 775-7704


Dan Walkow
Seabank Financial
White Rock
Local     (604) 541-9952
L D        (866) 541-9952
These two individuals and their companies have gone to the effort to get themselves registered just about everywhere so they can deal with a Candian in Florida or California or Nevada, etc.

Note that because of their specialty, they tend to deal with accounts in excess of $200,000

However, both parties would welcome an exploratory call. �
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Canadian Passport and H1B - OCI - Overseas Citizenship of india


Hi, Mr.Ingram. I have been in your website for few day. Lots of info. Excellent Job. I have been working in US (Detroit) 7 years and I landed in canada on 2003. I have my Indian passport with H1B Stamped. I finished my canadian citizenship test last week. If everything goes well, i will become a canadian citizen within a month. Once I become candadian citizen, what will happen to my H1B visa stamped in my Indian Passport? Do i have to surrender my Indian Passport immediately? if so, How long it will take to get Canadian Passport? Do i have to go for h1b stamping for my canadian passport again? I dont want to go for TN and i would like to stay in H1B.

Thank you in advace.
david ingram replies:

You do not have your Indian Passport taken away when you become a Canadian citizen.

You DO officially lose your Indian Citizenship under Section 9(1) of the Indian Act but no one shows up to take away your Indian passport.

And you can still maintain MOST OF THE  status of an Indian citrizen living abroad by applying for the status of OVERSEAS CITIZENSHIP OF INDIA.  This is NOT dual citizenship but is 'almost' dual citizenship.

SEE    for more information.

There is a long wait right now for Canadian passports but you should get it within three months. 

Your H1B in the Indian passport should still be valid until you can get your Canadian passport, at which time I presume you would want to transfer it to your Canadian passport.  I suggest that you discuss the matter with your company's immigration attorney.  The Visa is really the result of  your company's application and you should not do anything without their knowledge. 

Last, but not least, do not make any moves or decisions based upon this answer.  You must deal with your company's lawyer in the matter to maintain your position. 
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dual citizen (US/Canada) returning to US but has not filed US returns



My Wife a US Citizen, is a Dual Citizen, and we are returning to the USA soon, She has filed Canadian Taxes every year while in Canada, and is upto date.

She has made no income from the US during that time. (Except for the last two Years)
She has been receiving her SSN Benifit approx $3900. per year).

We recently started reading on line where she should have been filing a US Tax form, we had been advise that we did not have to by varoius accountants that did our taxes..
over the years..

Help  what do we do now ???

Please respond

david ingram replies:

Your wife should file her current return plus back taxes for six years. If you go to and read the October 1995 newsletter in the top left hand box, it will tell her what her duties as a US citizen were to the IRS al these years.  If she reads the US Canada Taxation section in the second box down on the right hand side, it will tell her what forms to file.

The penalty for failure to file the 5471 form (if she owns 5% or more shares in a Canadian company) has increased from $1,000 every thrity days to $10,000 every 30 days. AND, there is a new form number 8891 which needs to be filled out to report RRSP accounts.

We would be happy to look after them for you if needed.  As you have discovered less than 1 out of a 1,000 Canadian tax people has any real understanding of the American system.