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T2091 tax free sale of house in US return to Canada

As of today, I am limiting myself to 2 questions a day from non-clients.
You won this one.


In 2006 we moved back to Canada from California, sold the house in CA, and
used the profits from the sale for income investment in Canada. Capital
Gains in California would have been based on a SINGLE adult (widow), and as
such $250,000. of the GAIN would have been excluded from taxation. Is there
the same or similar exeception in Canada?


To get the $250,000 tax free on the sale of a US person's house, the person
must have lived in it for 24 out of the last 60 months. The 24 month rule
can be pro-rated when the person is forced to sell their residence because
of death, divorce, marriage, birth of triplets, loss of job, job transfer,
etc. So if a Coos Bay Oregon person was in their home for 12 months and
transferred to Portland, they could earn 12/24 x's $250,000 or $125,000 tax
free. If it was two people, they would get $250,000 between the two of
them. When doing their US tax return, they should show the gain on schedule
D and then exempt it under section 121.

In general, there is no tax on the profit from the sale of a principal
residence in Canada. However, a US citizen or green card holder who sells a
Canadian house and makes more than $250,000 US is still liable for US tax on
a Canadian Sale.

To be a personal residence in Canada, the house must have been ordinarily
inhabited by the taxpayer. However, we do allow the taxpayer to move out of
the house and rent it out for up to 4 years plus 1 and still claim it tax
free provided they do not own another home they are designating as tax free
for the same period. Form T2091 has the details and you can find it at

there is also a worksheet you can use at
This older q & a will help you as well - remember that if you need the
returns done for both countries and California, that is what we do in
person, or by email, snail mail, fax or courier.

----- Original Message -----
From: [email protected]
Sent: Thursday, October 21, 2004 11:21 PM
Subject: [CEN-TAPEDE] How long do you have to live in a house in Canada to
make it tax free. -Ask an International real estate mutual funds immigration
Divorce income tax expert experts - David Ingram 's Services North Vancouver
BC Canada Joe Grasmick CKBD AM600 Radio Sh

My question is: Canadian-specific

QUESTION: Dear Mr. Ingram,
I bought a house in the December of year 2000, lived there till the end of
December 2000 (3 weeks) and started to rent it out on January 1, 2001. I
filed the election 45(2) to claim the house as my primary residence for
years 2001, 2002, 2003 and will do it for 2004.
I do not claim a depreciation for those years.
I want to sell the house now. Do I need to move in house first in order to
avoid the payment of the capital gain taxes. For how long I have to stay
there to be eligible for not paying the capital gain taxes on sold house if
I need to move in.

Thank you in advance for you help,
david ingram replies:

First I am going to repeat your old question from last July and my answer.

My question is: Canadian-specific

QUESTION: Hi, David!
I would like to know is it possible to use the election under the section
45(2) again if the old house is sold and the new one is bought. Can it be
used unlimited number of times by the condition that it is used for each
house only once.

Thank you
David Ingram replies:

Section 45(2) is intended to allow people to try something out. This means
that if you move to a rented condo for a couple of years and rent your house
out, you can move back into the house without suffering a capital gains tax
under section 45(2).

Since it was passed on June 17, 1972, (32 years ago now) I have never seen
it used more than twice by one person.

Does not mean it has not been used more than twice in thirty years, it just
means it is unlikely.

There is no numeric restriction but if you are moving in and out of houses,
the CRA will treat you as a trader and tax you at full rates.

Now, to answer this question. Section 45(2) is NOT something you can plan
to use. In other words, your living in the house for three weeks and
renting it out and filing a section 45(2) election does NOT make it tax free
if you bought the house to rent and not to live in as your personal
principal residence.

Your question indicates to me that you are trying to beat the system and did
not buy the first house to live in and unless you can show the tax office
that you moved every stick of furniture in and really intended to live
there, the CRA will not allow it to be sold tax free.

This year, a new policy of the CRA is that they wish form T2091 to be filed
with every tax return where a personal house was sold during the year.

If it was your residence and you genuinely intended to live there and were
transferred of suddenly got married or could not stand your neighbour or
lost your driver's licence or suffered some other disaster that caused you
to "HAVE TO" move suddenly, filing section 45(2) will make it tax free
provided you did not also own another house that you did live in. If you
did own another house that you actually lived in, claiming the house you
have filed the 45(2) election for as tax free, will MAKE THE HOUSE YOU

If you have a genuine 45(2) election, you do not need to move back in. If
it is not a genuine 45(2), moving back in will TRIGGER a tax bill as you
move in.

You need a consultation with someone who knows the rules before you make a
mistake. I am available in person or by phone at a fee of $350.00 minimum
for an hour but not until November now.

As many know, I charge this for US / Canada tax an immigration advice as
well. I am not alone though.

If you have a tough US immigration question to ask or one that I cannot
deal with (remember I do Immigration AND tax) Joe Grasmick is the place to
go for a telephone consultation. His fee is $295.00 per HALF hour and you
can get hold of him at

I have sent two out of town people to him in the last month where it was
obvious to me that the people needed a lawyer as opposed to a consultant..
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FACTUAL RESIDENT or Foreign tax credit , Canadian working in the US



I am a Canadian resident working in the US on a TN visa. I pay the following
taxes every pay stub in the US:

Federal Income Tax
California Income Tax
Social Security (FICA)
Federal Medicare
California Vol. Disability

Can I get foreign tax credit for all of the items above when I file my
Canadian tax return?


david ingram replies:

The answer is yes but you likely do NOT need to file a Canadian return
unless you have left your family back in Canada and are visiting often and
not intending to take them to join you in the US. If they are going to join
you in the US and just waiting to finish the school year, sell the house,
etc., you may be filing a Canadian return but you are not taxable in Canada.

[email protected]: Please see bottom of message if you wish to unsubscribe.

My_question_is: Canadian-specific
Subject: non-resident filing
Expert: [email protected]
Date: Sunday January 21, 2007
Time: 10:49 PM -0500


Hi David,

I have been a TN visa holder since 2005. In 2005 I was taxed as a factual
resident of Canada since my spouse and children were left in Canada. In Sep.
2006 after my spouse and children moved to US, Revenue Canada determined we
both were non-residents “as of” the day they departed from Canada to US. I
did not have any other ties in Canada before my spouse and children left

I am wondering if I should treat myself as a full year non-resident for 2006
Canadian tax return or still a factual resident from Jan. 1 till the day my
spouse and children moved to US. As CRA’s resident determination used the
word “as of Sep. xx”, my first instinct is that I have to file a part year
2006 Canadian return as a factual resident. Thus, I will be taxed on my US
incomes as exact what I was taxed in 2005. However, after reading one of
your response to a person with the similar situation (see below), I got
confused. Should I think of myself a non-resident for full 2006? If it is, I
have actually no need to fill Canadian return because I had no Canadian
incomes in whole year. If so, will my spouse also be treated this way and
file a non-resident tax return for the days living in Canada in 2006?
david ingram replies:

You fall into the Wolf Bergelt Tax case and I believe you were a
non-resident from the day you left. If the intention is to leave and your
spouse and children follow later, you may be a factual resident but as such,
you get to deduct the US earnings on line 256 under Article IV of the US
Canada Tax Convention (TREATY).

You can find the Wolf Bergelt case in the middle of about 25 pages in the
"US/Canada Taxation" section in the second box don on the right hand side at

To really make it work, you must have equal or more "family" things in the
US. therefore, you get the spouse and kids (half the time now it is the
wife with the TN or H1B or H1A or L1) down to visit you every month instead
of you coming back to Canada every week.

They get their US video store rental cards, you give up your Canadian
Medical, get a US driver's licence and get your car registered in the US

You get US credit cards immediately and give up your Canadian cards. (while
reading the Wolf Bergelt case, make sure you read the Dennis Lee case as
well and study Article IV of the US Canada Tax Treaty which is at two or
three pages in to the start of the section)

i.e., the family has to have a nexus in the US as big as Canada to escape
the CRA Taxman..

This is your email answer I was talking about.
QUESTION: Hi, I have a question regarding my resident status for tax
purpose. I moved to the US to start a job in October 20 2005 on a TN-1
I have filed the form NR73 and Revenue Canada have replied that I am a
non-residence as of Oct 20 2005 because I have nothing left in Canada
basically. However when I try to fill in the T1, they have a few option
regarding my residence status in box 117. Am I a non-residence or a deemed
resident of Canada because I stayed for 183 days or more in 2005? I called
CRA and they give me different answers. Really appreciate your help.
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Writing off single room for office in home for rental

QUESTION: I have 1 rental property which is a semi detached home. Can i
write off the room in my personal residence that I use for my office, and
the same percentage of all bills, mortgage interest etc from my residence?

david ingram replies:

The answer is NO! A records only office is NOT deductible. To claim an
office in the home, it must be the taxpayer's principal place of business
and/or be used to meet clients on a regular basis.

In addition, even if the above criteria are met, the office in the home can
not be used to create or increase a business or rental loss.

Not good news but that is the law.
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old taxes in US and Canada

My_question_is: Applicable to both US and Canada
Subject: old taxes
Expert: [email protected]
Date: Monday February 12, 2007
Time: 06:51 PM -0500


how far can you go back to collect taxes? I have money oweing from &6',77',
and 82-86'. Is there any way I get the money back?

david ingram replies:

In Canada you can go back three years at any time and ten years with an
appeal to the Fairness Committee.

In the USA, you can go back three years.
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Incorporation or not - making mortgage interest deductible


I have started a new business and it has taken off. I have spoke to one
accountant who said to go partnership. I have several family members and
established business associates saying to incorporate. How do I know whats
best for me. I work in property services sector and need a good accountant.
I am finding this process more stressful than bringing in new contracts.
david ingram replies:

I commend your accountant for keeping you in a proprietorship or

If your mortgage interest is already deductible, than incorporating may /
might / could possibly be a good idea. However, if it is only you and your
wife running it, there are more disadvantages than advantages.

Goto and read the November 2001 Newsletter in the top left
hand box. The first page deals with American stuff and then the next 9
pages deal with making your interest deductible which is almost impossible
if you are incorporated.

I would charge a minimum of $424 (inc GST) for a consultation on the subject
but you can get most by reading that newsletter.

Fred Snyder's seminars also deal with the subject and are free.

Every Thursday Evening, Fred Snyder of Dundee Wealth Management conducts one
of 17 different financial seminars in the boardroom of his office

Time: 7:00 to 9:30 PM
Date: Every Thursday evening
Place 1764 West Seventh
Vancouver (corner of Burrard)

Phone (604) 731-8900 to register

No cost - no obligation

Topics always cover mortgage interest as a deduction

other topics - getting the mortgage, estate planning, critical care
insurance, income taxation, differences between stocks and bonds, and
usually the most innovative HELOC mortgage offered in Canada from Manulife

If you are starting in downtown Vancouver and do not want to go home first,
one of the excellent THAI HOUSE restaurants is in the same building and
makes a nice start to the evening. If it is your first seminar, Fred will
buy you dinner if you are pre-registered.

I, david ingram, will be at the Thursday evening following the last Sunday
of each month to cover mortgage interest as a deduction and give the class
an adding test.

This older question will also give you an idea of my attitude to the

My_question_is: Canadian-specific
Subject: US Corporation vs Canadian Corporation
Expert: [email protected]
Date: Thursday November 23, 2006
Time: 10:14 PM -0500


I live in Ontario, Canada and earn business income in New York doing
consulting work. Does it make more sense to Incorporate a US Company or a
Canadian Company for tax purposes.

Also, would there be any changes to the answer if I was earning investment
income or Capital gains?

david ingram replies:

Unless there is some exceptional reason I am not aware of, I think you
would be nuts to incorporate in either place.

I could do one simple thing to increase the gross revenue of my business by
$150,000 to $300,000 per year in one day. HOW? you may ask.

Simple, I would just take 200 of my self-employed clients and suggest that I
think it is time they were incorporated. They would jump at the chance
because secretly, we all want to be president of our own corporation; we
think it sounds better socially than "proprietor".

After 100 of them had incorporated I would then be able to charge between
$1,000 and $3,000 more per year for their work if they were just in one
country. Put them in two countries and $10,000 is more likely than $5,000.

WHY DON'T I do it?

Well, for the most part, the only people benefiting from a corporation is
the lawyer and accountant who put it together.

You may be the exception, but I would have to see it first.

In my 43 years in practice, I can not identify a single instance where the
ownership of a corporation kept a person from financial ruin or bankruptcy.
I can think of dozens if not hundreds where the existence of the corporation
caused a personal bankruptcy or financial ruin.

The really silly part of this is that it takes ten minutes to convince
someone to incorporate and three hours to talk them out of it if their
brother, banker or best friend has suggested it.

And the really silly people are those with a rather simple business
incorporate on both sides of the border. They turn a simple $1,000
accounting fee into $5,000 to $15,000 a year and half the time put their
working status in jeopardy on one side of the border or the other.

goto and read the Nov 2001 Newsletter in the top left hand
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US / Canada Social Security Totalization Agreement


I am a Canadian citizen, transferred to a u.s. division of my canadian
company. I stopped paying into CPP when I moved as I am now an employee of
the u.s. company. But, I am also not paying social security. I am on an L1A
visa. Am I legally obligated to pay social security?

thanks very much!

david ingram replies:

There is a provision in the US / Canada Social Security Totalization
Agreement for you to work in the US for five years or less as an L1 and NOT
pay into Social Security, For this to take effect, your employer must write
to the Social Security Administration and ask for written permission to
exempt you from the payment.

However, if you are exempted from paying FICA (US Social Security) you MUST
continue to pay CPP to Canada. see it at

If your transfer is expected to be for more than five years or if you have a
Green card application in the works which indicates you are intending to
stay, you would have to start paying Social Security.

Because of the WEP (Windfall Elimination Provision) which reduces Social
Security payments when you have not paid in for thirty years, it is a
delicate question as to where you get the best bang for your buck by paying

However, in my opinion, at this point you should stand your HR department up
against a brick wall and shoot them if they have left you in a position
where you are not paying either.

I can tell you that only 1 or 2% of people retire without their indexed
Social Security or Canada Pension Plan retirement benefits being a big
difference in their retirement lifestyle.

The following is an other reply you might get something out of.

Sent: Wednesday, January 31, 2007 3:15 PM
To: [email protected]
Cc: [email protected]
Subject: Canadian Pensions & US Social Security

The following is not really a tax problem, but still quite taxing. (Your
colleague, Gary Gauvin has resolved my Canadian & IRS tax situations.)

My current problem is with the Social Security Administration and how my
early retirement was reduced by an annuity I am getting after working for
about 5 years at York University (in Toronto) Apparently they are applying
Government Pension Offset / Windfall Elimination Provision to reduce my
payments because of the annuity.

While in Toronto, I think I was paying into the Canadian equivalent to
Social Security, and it is my understanding the existing treaty between our
countries, addresses some of the implications - particularly insuring that
applicants who worked in both countries can count the contributions
(quarters) to qualify for one or the other systems.

When I questioned SSA about this, claiming that the annuity was not from OAP
nor CPP, but from the equivalent to a company like TIAA-CREF (I also have a
pension from them for work at several institutions in the US.) they only
answered 'the source doesn't matter'

I have recently asked for a detailed statement on the calculations, with
reference to (quoting) regulations, the legislation on which they are based,
and any treaties involved.

If you can direct me to any further information, particularly available on
the web, I would greatly appreciate it.


david ingram replies:

If the York pension reduces when you start collecting CPP as I believe it
does, it is taken into account under the WEP.

The same thing happens if a high school teacher moves from Florida to
Oklahoma where there some sort of teachers pension offset against Social

Good luck on your endeavours. There are some people who seem to get away
with it and others who are caught under WEP and truthfully, I have not been
able to get any sort of definitive answer from anybody but then I have not
spent much time at it either and every state and every pension and every
client is different.

The following is a couple of other answers


[email protected]: Please see bottom of message if you wish to unsubscribe.
My_question_is: Applicable to both US and Canada
Subject: Pensions
Expert: [email protected]
Date: Sunday January 14, 2007
Time: 01:56 PM -0500


Can an American Citizen ,living in Canada as a Permanent Resident married to
a Canadian Citizen and having worked in the U.S. and Canada collect both
Pensions as he paid into both pensions and lived and worked in the
U.S.first for twenty years and another twenty years in Canada.Does he have
to report the U.S. Pension in Canada and the Canadian in U.S. He has
a U.S.passport for entry into the U.S. and a Permanent Resident Card for
entry to Canada.
david ingram replies;

Under Article XVIII(5) of the US / Canada Income Tax Convention, he or she
is only taxable on the pensions in the country in which he or she lives.

He or she does qualify for both pensions but only half of the CPP (20 out of
40 years) and less than half of Social Security because of a clawback
provision called the Windfall Elimination Provision when he or she has not
put a total of 30 years into US Social Security.

You can find US Government explanations of the WEP at and and

The following older Q & A might help -

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My_question_is: Applicable to both US and Canada
Subject: US Social Security
Expert: [email protected]
Date: Wednesday December 13, 2006
Time: 07:38 PM -0500


I lived and worked in the US for 5 years, and recently returned to Canada. I
have worked in Canada a total of 30 years.

Do I qualify for any SSI compensation for the 5 years there or would I have
needed to work the requisite 10 years to qualify for SSI pay?

david ingram replies:
When you hit retirement age, you will fill in an application for US Social
Security and an application for Canada Pension Plan.

In general, The US will give you credit for five years of contributing to
Canada Pension Plan to make up the ten years qualifying period.

Then, because you have not contributed for 30 years, they (the Social
Security Administration) will apply the Windfall Elimination Provision and
send you about half of the actual Social Security benefits you earned.

This is NOT discrimination against Canadian or other country workers
however. The WEP also applies to US people who have worked in different
occupations in different states. For instance teachers in some states do
not contribute to Social Security. If they move to a different state where
they do, the WEP reduces their Social Security in the US because of the
"Windfall" of the other states pension. So it is not just used against

The following older answers may help as well as they contain comments from
other readers.

This was an older centapede that dealt with two other opinions about the
Windfall Elimination provision


Social Security - Foreign Work test -

Frank C sends more information about this very important matter for those
who have contributed to Social Security and to CPP as well. Read on and save
if it applies or might apply to you in the future.


One further correction. The Windfall Elimination Act does not affect
someone receiving OAS from Canada, only CPP. The U.S. legislation refers to
pensions derived from working. (Unlike Canada, the U.S. offers no pension
to people just because they have reached a certain age. They must have
worked, or their spouses must have worked.) So, if you WORK in Canada, and
have worked less than 30 years in the U.S., the WEA will affect you.

And...if you take Social Security early (before the standard retirement age
for the year you were born) and work in Canada, you'll be hit with yet
another rule: the "Foreign Work Test". This rule takes away one month of SS
benefits for each 45-hours you work in Canada in a month! This effectively
means that you can't be receiving early SS in Canada (say, at 62) and
working in Canada, unless your wages are so high that you don't mind
forfeiting your SS. Once you reach full retirement age, though, you can
work in Canada as much as you like. Here's a good article on this subject:

Interestingly, I was born in the same year as Mark (below) and also plan to
use my university years in Canada to qualify for full OAS. Sure hope that
time is considered as "living" in Canada! (How could it not??)

Frank C

>I obviously did not understand the 30 year rule or substantial payments to
>FICA to avoid a Clawback when receiving OAS / CPP from Canada . My
>understanding was that the US / Canada Social Security Totalization rules
>overrode the WEP but it appears I may have been incorrect. Read on if you
>are going to be collecting both with les than 30 years into the FICA (US
>Federal Insurance Contribution Act or Social Security), I have no time to
>study or figure it out at the moment so will leave it to others. I have
>received several different replies:
>Andrew Nelson sent the first correction:
>I guess you are not aware of the Windfall Elimination Provision (WEP)
>that hits many cross-border workers.
>THAT is what this person is complaining about. It really does sock
>anyone who earns foreign pension (including CPP) but has less than 30
>years (not 10) of SS-contributions.
>As the writer states, it does result in a substantial knock down of SS,
>unless the person can manage to reach the 30 year mark.
>This is the SSA's equivalent of the IRS's AMT provisions, and can hurt
>pretty bad.
>There is a couple of pros out there (namely Keats) who have been
>successful in getting the SSA to use the totalization treaty to override
>WEP, but it is not simple.
>Keats has a chapter on it in his latest Border Guide. Only his latest
>version, since WEP is just now hitting retirees.
>Mark sends the second addition
>Warning: the following is wordy but I've included some details that might
>useful in your practice. I also have a new question at the end. Hope I'm
>stretching my luck...
>Thank you for such a rapid response and for forwarding all those dialogues
>others that pertained to my situation. I was prepared to wait several
>knowing you have quite a backlog.
>I very much like your suggestions about H&R Block and Jim Pettinger. I'm
>his mailing list and have often thought about attending one of his
>but haven't as I'm not much interested in export-import. I will definitely
>give him a shout. I've also wondered about the Victoria Clipper (Seattle
>company) that docks here in Victoria a block from where I live. I just
>an accounting job advertised by a Canadian mining company literally metres
>south of the border in Blaine. They have gold mines in both countries.
>hoping their newly hired accountant leaves soon;) Seems to me I'd be a
>fit for them to visit their mines in Alaska and B.C. & Quebec.
>As to the US/Canada Social Security Agreement, my understanding is that
>apply if I were working in Canada on a short-term basis, but I've been
>in Canada nearly 5 years, so I've contributed to CPP for a few years now.
>you know, it takes nearly that long to complete the citizenship path, which
>I've just done a couple weeks ago. I did pay a personal visit to Social
>Security in Bellingham a couple years ago to learn more about the Windfall
>Elimination Provision, and I did find out they would never deduct more than
>of my CPP from Social Security. Such generosity. I have 25 years worked
>the US (I'm 57 y.o.) but with 30 I would escape the WEP penalty altogether.
>spoke with the manager of the SocSec office in B'ham so he knew my
>and he never said the totalization agreement would apply.
> See WEP info:
> FYI, WEP was instituted in 1983 during the Reagan presidency as
> part of a package to save Social Security. For someone like me,
> contributing to another country's system, it's just a tax grab
> ripoff, in my humble opinion. I liken it to paying premiums on
> two life insurance policies and then having the beneficiary find
> out upon my demise that the 1st company won't pay because there
> had been a second policy. Never mind I'd paid premiums for both.
>I'm aware of the relative withholding rates for FICA vs. CPP, and I would
>work for someone else in the US to avoid the self-employment rate. I
>for the five years I'd work in US, it would work to my benefit to pay the
>higher FICA rate as I would increase my retirement income about $200/mo.
>between earning more SocSec and avoiding the WEP. I intend to live in
>in retirement in spite of higher taxation because my partner is Canadian
>and detests the U.S.
>I won't be subject to the OAS clawback in retirement, sorry to say, though
>should approach the $60K annual income limit. Jointly, our goal is to have
>about $60K income EACH so we avoid the clawback. By the way, I currently
>self-employed in Victoria as a small-time (friends & family) financial
>The current net income limits for OAS clawback, from 0-100%, are $60,806-
>$98,850. (You had used a figure of $80,000+ for the upper limit in your
>I wasn't going to send this to you until I heard back on the first one, but
>we're already there!
>I fall into Category 2 below (between the dotted lines) for a full OAS
>Full Pension
>Normally, if you meet the conditions in either of the two categories
>below, you qualify for a full pension:
>Category 1 - You meet the one condition below
> You lived in Canada for at least 40 years after turning 18. NO
>Category 2 - You meet the three conditions below
> 1. You were born on or before July 1, 1952. YES
> 2. Between the time you turned 18 and July 1, 1977, you
> lived in Canada for some period of time. ???
> 3. You lived in Canada for the 10 years immediately before
> your application was approved. YES
>#1) I was born in 1948.
>#3) I will have been resident in Canada 12 full years when I turn 65.
>The gray area for me is condition #2, as I was a student at U. of Alberta
>1976. There is some question, even among the local OAS office personnel,
>whether that qualifies as 'living' in Canada. My own opinion is that I did
>not 'live' anywhere else during that time. I cannot find any definition
>of 'living' or 'residence' in the OAS Act or in OAS appeal cases.
>So, at long last, my question for you:
>The difference between a partial (12/40=30%) and full OAS pension for me is
>just over $4,000/yr., not an insignificant amount in my retirement
>I'd like to know what my chances are of qualifying for the full pension.
>Thanks again for all your help and super-rapid response.
>david ingram replies:
>I do not know of anyone that specializes in OAS appeals. Does anyone else?
>The original Q & A follows:
> > Subject: Employment opportunities for US-Canadian dual citizen
> > Expert: [email protected]
> > Date: Tuesday November 08, 2005
> > Time: 10:52 PM -0800
> >
> >
> > I am US-born and recently became a Canadian citizen also. I want to
> > White Rock, or vicinity (to preserve my Canadian Old Age Security
> > eligibility), and commute daily to work along the I-5 corridor between
> > Blaine and Bellingham.
> >
> > I am caught in the trap of the US Social Security 'Windfall Elimination
> > Provision' which will deduct the exchange-related equivalent of 1/2 of
> > Canada Pension Plan benefit from my US Social Security benefit unless I
> > another five years of 'substantial earnings' in the US.
> >
> > Are you aware of any employment agencies on either side of the
> > border that recruit dual citizens in particular? I read in one of your
> > email replies that dual truck drivers are in great demand, but having
> > most of my career as an accountant, that's probably not a fit for me.
> > ideas are much appreciated.
> > --------------------------------------------------------
> >
> > david ingram replies:
> >
> > I do not know of agencies that specifically deal with dual citizens.
> > "we" should start one up. If you are an accountant, take the H & R Block
> > course in Bellingham and the one in Vancouver and get into dual country
> > work. I am always looking for someone who is good at that.
> >
> > Look for a company that works on both sides of the border.
> >
> > Calling Jim Pettinger at 604 273-4474 might give you some ideas. Jim
> > International Market Access with warehouses in Bellingham and Richmond
> > runs regular seminars on cross border issues.
> >
> > I would bet that he has over 100 clients who might be able to use the
> > services of someone who can work on both sides of the border with no
> > restrictions.
> >
> > With regard to the US / Canada Social Security Agreement, i do not
> > understand your concern. What the agreement is set up to deal with is
> > making sure that you only get one or the other of a pension for the same
> > time worked.
> >
> > In general, if you can put into the US system, you will receive
> > more when you apply for your CPP or FICA.
> >
> > If you work as an employee in the USA, you will have to contribute your
> > to the FICA (Federal Insurance Contributions Act) at roughly 6.23% up to
> > maximum of ($87,900 -400) $87500 for a total of $5449.80.
> >
> > At the same time you will be paying another 1.45% of the income with no
> > limits so at $100,000 you would pay $1,450 and at $200,000 you would pay
> > $2,900 but would still only owe the $5450.00 of Social Security (FICA).
> >
> > If you were self employed, you would pay both halves.
> >
> > Compare this with the CPP which charges employees 4.45% on a maximum of
> > ($40,500 - $3.500) $37,000 or $1,831.50 and that is it. (all figures
> > 2004 calculations by the way).
> >
> > As for the Old AGE Pension that Canada hands out, remember that it now
> > an earnings test and is all clawed back by $80,000+ earnings.
> >
> > The best situation for an over 65 person is to have worked the last ten
> > years in the US to qualify for the US social Security and Medicare A &
> > Live in Washington state and you have medical as good as BC's and a much
> > lower tax rate on your pension income.
> >
> > I am 99% sure that you will end up with more money that way then living
> > Canada and trying to collect OAS
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Joint-Venture Taxation


In short: How are 'venturers' taxed in a Joint Venture?

Details: I have been asked to par take in JOnt Venture, a short project,
that two to three business' will take part in until the project is complete,
then we will all go our seperate ways(back our regular business).

I am not bringing any money into the business, as the others have more
capital to invest, I will however be given truck, a computer, and some
tools - in exchange for my 'brains'. Do I run the risk of being considered
by CRA, an employee, instead of a 'venturer'? I get to keep all this assets
by the way.

And once the business makes money, and we assume it will, do I run the
profits through my existing business where I am a proprietor, or what
happens? I guess this is where I come back to my question.

Please help - I am very confused and what to do some tax planning for
david ingram replies:

There may be three joint venturers and each may end up being taxed
differently depending upon how they have "entered" the joint venture.

As described, there would likely be a T2124 filed for the partnership and
you would put your 1/3 on line 135 of your personal tax return.

Any more, and you are going to have to sit down and pay someone for a
consultation to decide how you are going to be part of the joint venture.
If there are large amounts of money involved, you might want to enter the
joint venture as a corporation. Even though I advise 99 out of a 100 people
NOT to incorporate, if you are going into business with deep pocket
partners, it is really easy for them to leave you holding the bag if
something goes wrong.

i.e. if one of the other joint venturers is operating as a corporation and
causes a large bill to be run up, all members of the joint venture are
liable for the bill. If you had two zero asset joint venture corporate
partners, "your" house is on the line because of "their" actions.
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USA mortgage interest and ta

Subject: mortgage interest and tax


I’m a cdn citizen working on a TN visa in Virginia. I’m thinking of purchasing a home here, and I’m not clear if the mortgage interest and tax are tax deductible. The home will be my primary residence, will be used for nothing else.

Best regards,


david ingram replies

Your Mortgage interest and property taxes are dedcutible on schedule A of your US 1040 return. If you had kept a cottage at Collingwood or Whistler of the Gaspe or Lake Winnipeg or anywhere else in Canada, France, Australia, etc., the taxes and interest on your second vacation home would also be deductible even if the property was not in the USA.
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Working in the US and Living Canada

My_question_is: Applicable to both US and Canada
Subject: Working in the US and Living Canada
Expert: [email protected]
Date: Thursday February 15, 2007
Time: 12:22 PM -0500


I am married to a Canadian woman and we reside together in Canada. During
transition of converting my citizenship to Canada I am still employed by a
US company. I work from home (in Canada) and draw a salary from a US
company. I am required to travel there and work from the local office
Seattle office every other week for a couple of days.

My concern of course is taxation. What do I need to do? I make less than
$65,ooo.oo US per year. My wife is employed here in Canada and I live here
with she and our son.

The company I work is small and does not know how to tax me in any other way
than if I lived in the US.

An you help?


david ingram replies:

1. If you are a member of a 401(K) and putting money into it, stop now.
Canada will not allow the deduction now and tax you on the money when it
come out. OUCH!!

2. You could be paid as a contractor on a 1099. If so, the company should
pay you everything you are getting now PLUS their half of Social Security
and Medicare, whatever they pay for unemployment insurance and whatever they
put into a 401 plan if you have one.

3. Either way, you are a US citizen and being paid in the US. You will file
your US return but should be figuring out how much was actually earned in
Canada. You would then owe tax to Canada first on the money earned in
Canada (even if paid for Seattle) and the US first on the money earned in

You would then claim foreign tax credits on form 1116 to claim credit for
the tax paid to Canada first and put the US tax, Medicare and Social
Security you paid and the net US income on lines 431 and 433 of your
Canadian return.

Glad to look after them for you if necessary.
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I am a canadian citizen living in US on H1. My son is US citizen


I am a canadian citizen living in US on H1 and my husband is a green card
holder in US( soon a citizen of US). My son was born in US 7 months ago. I
would like to know how i can get a canadian citizenship for my son? Also i
haven't done my tax in canada last two years since i live in US. Will this
be a problem?

david ingram replies:

You can find the details of registering your son's birth out of Canada at

If you have no Canadian real estate or other Canadian Income, you do not
need to do a Canadian tax return.

If you have interest or dividend income, you have to make sure that your
financial institution KNOWS that you are a NON-RESIDENT of Canada and
deducts 10% of any interest paid and 15% of any dividends paid to you under
Articles XI and X of the US / Canada Income Tax Convention (Treaty)

This applies to your husband as well.