Inheritance in by US resident - international non-resident cross border income tax help estate family trust assistance expert pr
QUESTION: Hi David, I am Canadian working in U.S under TN visa. My father passed away last year and received a death benefit from his supplemental pension plan amounting to 21K . Gross benefit is 32K less federal and provincial tax of 11K giving me a net amount of 21K. This is not an RRSP, RRIF, CPP, QPP nor old age pension. My question is...should I include this in my U.S. filing as world income. I was in U.S. from Jan-Sept 2007 and worked remotely in Canada from Sept-Dec 2007. I would appreciate your advise. Thanks. ------------------------david ingram replies:
As described, it is not part of your tax return. The tax should have been paid from your father's last or estate tax return and the net is just capital to you in the US and Canada.
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QUESTION: Hello -- I stumbled across your site and it seems very helpful. Here is my situation. I am Canadian but went to the U.S. for university beginning in September 2001. I graduated from the school in May 2005. Beginning in June 2005 I stayed in the U.S. working. I left the U.S. at the end of July 2007 permanently to move back to Canada. I began working in Canada in August 2007 and worked through the end of the year. How should I file my taxes? Am I a resident of the U.S.? Am I a resident of Canada? Look forward to your answer!-------------------------------------
david ingram replies:
For 2007 you will file a departing the US 1040 DUAL STATUS RETURN (line 35b) and a 1040NR DUAL STATUS STATEMENT. the 1040 only reports the US income but you do not claim or get the standard deduction. You can claim itemized deductions if you have them.
For 2007, you will file an arriving in Canada T1 General. This only reports your Canadian Income but pro-rates your exemptions.
These older questions will stretch your imagination a bit.
My_question_is: Applicable to both US and Canada
Subject: Where do I pay tax?
Expert: [email protected]
Date: Wednesday March 21, 2007
Time: 10:20 AM -0500
QUESTION:
I just moved back to Ontario, Canada after 7 years of loving in Virginia. I will continue to work the same U.S. company that I worked for while living in VA. Basically, I will be working from home. My question is, what do I need to do in order to comply with Can. Us Tax Treaty? Are there forms to fill out and send to the IRS? Also, my employer is not sure what they need to withhold...or if they should withhold anything and basically pay me cash and I will pay taxes here in Canada. What about FICA and all FUTA and unemployment?
Thank you. I appreciate all the help I can get.
__________________________________________________Subject: Where do I pay tax?
Expert: [email protected]
Date: Wednesday March 21, 2007
Time: 10:20 AM -0500
QUESTION:
I just moved back to Ontario, Canada after 7 years of loving in Virginia. I will continue to work the same U.S. company that I worked for while living in VA. Basically, I will be working from home. My question is, what do I need to do in order to comply with Can. Us Tax Treaty? Are there forms to fill out and send to the IRS? Also, my employer is not sure what they need to withhold...or if they should withhold anything and basically pay me cash and I will pay taxes here in Canada. What about FICA and all FUTA and unemployment?
Thank you. I appreciate all the help I can get.
david ingram replies:
This older question will help you:
QUESTION:
Hi,
I'm an American citizen residing in Canada (permanent resident) and working for an American company remotely from home in Canada. I get a W2 at year-end. I assume I have to file both US and Canadian tax returns.
My questions are :
1) Do I file a US tax return and claim a foreign tax credit on my Canadians tax return. Or is it vice versa?
2) Do I still file state/local tax return in the US (I lived in Maryland prior to landing in Canada), even though I now reside in Canada?
3) For the extra tax I end up paying to the 2nd country (in excess to what I pay to the first country), can I claim any type of credit or deductions on that tax in next tax year?
Thank you very much!
====================================================Hi,
I'm an American citizen residing in Canada (permanent resident) and working for an American company remotely from home in Canada. I get a W2 at year-end. I assume I have to file both US and Canadian tax returns.
My questions are :
1) Do I file a US tax return and claim a foreign tax credit on my Canadians tax return. Or is it vice versa?
2) Do I still file state/local tax return in the US (I lived in Maryland prior to landing in Canada), even though I now reside in Canada?
3) For the extra tax I end up paying to the 2nd country (in excess to what I pay to the first country), can I claim any type of credit or deductions on that tax in next tax year?
Thank you very much!
david ingram replies:
If you are working in Canada, you should not be getting a W-2. The reason is that as a resident of Canada, you should not be paying into US Social Security or Medicare or paying basic income tax to the USA.
Your first tax liability for services rendered in Canada under Article IV of the US Canada Income Tax Treaty is to Canada.
You should be filing a Canadian T1 return and paying Canada and provincial income tax first. Then you would file your US return and either:
1. Use form 2555 to exempt up to $82,400 of income from US tax and then file US form 1116 to claim a foreign tax credit on the excess OR
2. Use form 1116 to claim the foreign tax credit on your US return for tax paid to Canada. If you have children, you would usually do the latter because it would usually qualify you for the $1,000 per child USA refundable tax credit.
3. In the case of interest (10%) and dividends (15%), you must get any excess tax back from the US by reclassifying the income on form 1116.
4. In the case of interest, you can claim the difference between 10 and 15% as a deduction on Canadian schedule 4.
5. You should NOT be paying into a US 401(K) or US Social Security. Canada will not allow the 401(K) as a deduction.
Your employer should start paying you on a 1099 Basis and pay you your salary plus their share of Social Security plus their share of Medicare plus their share of any 401 or other pension plan they contribute to.
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David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
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Disclaimer:
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in this message is or should be construed as advice in any particular
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Be ALERT, the world needs more "lerts"
David Ingram
gives expert income tax & 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 $400 for 15
minutes to 50 minutes (professional hour). Please note that GST is
added if product remains in Canada or a phone consultation is in Canada.
This is not intended to be definitive
but in general I am quoting $800 to $2,400 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
$2,400 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 $150.00 up.
With a Rental for $350
A Business for $350 - Rental and
business likely $450
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 $800 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.
Just a guideline not etched in
stone.
This from "ask an income trusts tax and immigration
expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram
deals on a daily basis with expatriate tax returns with multi
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