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Hi - A friend told me of your website. I wanted to pose a question concerning my tax obligation.
I am a US citizen and Canadian resident. I work for a US company fulltime as a flight attendant based in Seattle, WA. I have a residence in Seattle and in Vancouver. I spend more of my time at my Seattle residence (more than 183 days) than my Vancouver residence. My wife and children are US citizens and in the process of sponsorship by me to be canadian residents. My wife and children live in Vancouver. My wife does not work.
Question: Do I need to pay Canadian tax or continue to pay US taxes only? Does my wife need to pay canadian tax prior to becoming a canadian resident? Should I file a NR74 Determination of Residency form?
Thank you.
MXXXXXXXXX
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David Ingram replies:
Your first obligation is to the US because that is where you are earningyour money and that is where you have spenmt more than 183 days and that is also your citizenship at the moment.
Your second tax liability is to Canada because your home and family is there and you obviously have an application for all of you to become permanent residences of Canada.
Article IV (2) of the US / Canada Tax convention (treaty) reads as follows:
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him. If he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident of the Contracting State with which his personal and economic relations are closer (centre of vital interests);
(b) if the Contracting State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident of the Contracting State in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident of the Contracting State of which he is a national;
(d) if he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.
As you can see from this, you are in a bit of a limbo because you seem to have a home in both places and your family is in Canada (personal intrerests) but your job and habitual abode is in the United States (economic interests).
One needs to be a King Soloman to figure it out but Canada would rule you a factual resident I am sure and tax you. it would depend upon driver's licences, home ownership, kids in school, library cards, etc. Go to www.centa.com and click on US/Canada taxation for a 29 page dissertation on US /Canada taxation. Read the Dennis Lee case with judge Teskey's decsision and I think you will agree that you have made yourself taxable in Canada but if your predominance of social events, etc., is still in the US, you might escape. To put it bluntly, you and your wife (bring the kids) shold make an appointment and come and see me.
I also wonder if you are not the person who asked the following question which was answered 5 days ago.
November 8th Question from another Flight attendent living in Seattle:
I am a US citizen and Canadian resident living in Canada (purchased a home one year ago in Canada) along with my wife and 2 children (3 and 6). I am a flight attendant working for a US airline in the US, so I earn income and work out of the Seattle base. I spend probably 75% of my year working in the US. My taxable income last year was $9900 USD. We are renting our suite in our home in Canada at $1000/mo. And pay interest on our mortgage for our house. Can I deduct my interest from our mortgage on the US tax form? Given my low income level, can I expect to pay a hefty tax on my Canadian tax return?
A:
You will file a US tax return which will be about the same as if you were living in Oregon or California instead of Seattle.
Your Canadian mortgage interest and your Canadian Property Taxes and Canadian medical payments are deductible.
You will file the same US 1040 you would file if you were working in Seattle and living in Portland or San Francisco. The difference is that instead of an Oregon return, you will file a Canadian return instead of a California or Oregon return as the second return.
Your 1040 will include your US earnings and the rental income on the suite will be reported on a Schedule E. If you happen to pay tax to Canada on the rental suite, you will claim credit on your 1040 by filing schedule 1116 as well.
What I do not know from your email is whether your wife is also an American citizen and is working in Canada.
If she is not a US citizen, you can still elect to report her income on the US return and file a joint return. You can also claim the children whether they are US citizens or not. If they are your children and US citizens, you need to get Social Security Numbers by filling in Schedule SS-5 for each of them. If your wife is not a citizen, she needs to fill in form W-7 for an ITIN - Individual Taxpayer Identification Number). If the children are not US citizens, they also need to get ITIN's by filling in form W7 so that you can claim them.
This type of return is our usual type of return and I would be glad to look after both the US and Canadian portions. You should, of course, have the same person do both.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321
New email to [email protected]
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed information or consultation and is to be regarded only as general comment. Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
Be ALERT, the world needs more "lerts"
This from "ask an income tax and immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate:
multi jurisdictional cross and trans border expatriate problems for the United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK, GB, American and Canadian and Mexican and any of the 43 states with state tax returns, etc.
Your name has been added to our email list because of an enquiry we have received, we may not answer your question but
another similar question will be as we lump them.
You may find more answers at www.centa.com
David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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