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QUESTION:
You've probably seen this one before - I've
looked through many pages of your website
and found much help, but I will ask my
specific question.
I am a dual citizen (US/Canada). I am single
and I live in Canada. I inherited an
American trust fund managed by Bank One in
Detroit. The dividends I lived off paid me
45000 USD. I paid Canadian tax and got a
tax credit for the American tax which was,
upon my accountant's insistance, only the
Alternative Minimum Tax. The IRS has been on
my ass for the last nine months demanding
more money, and my accountant keeps saying
they don't know what they're talking about.
The research I have done recently suggests
my accountant doesn't know what he's talking
about. Should I really only pay AMT in the
US? It's hard to believe...
Thanks,
Tim
=========================================
david ingram replies:
This one is actually very easy but since the Treaty was passed in 1980, I have NEVER - NOT ONCE - seen it come into my office prepared correctly by any office other than ours.
And I will admit that when I found the answer and wrote a minor computer program (8 days) that presented the information to the US IRS in a manner that anyone could understand, I was thrilled because up until that time in 1996, I was as flummoxed as every one else. I will also say that this is the only one that I do not spout out the whole recipe because it is my own fishing hole.
I will tell you that Article X of the US / Canada tax treaty governs your tax. You pay 15% to the US on your US dividends. NEVER any more than 15% although it can be less.. Therefore, your US tax should have been 15% of $45,000 or $6,750 which Canada will happily credit against your Canadian Tax.
You are correct, AMT has nothing to do with it. The secret is how you get the US government to accept the 15%.. Not once in 20 years did an IRS agent at the International Tax Office ever tell me how to make it work. I finally figured it out when I was typing part of the treaty out. Within a month I had retiled over twenty tax returns with an average of about $5,000 refund each. They came back like clockwork because the treaty over-rules just about everything.
I hate to be mercenary, but I would charge between $350 and $700 to straighten it out.
You could copy the method for 2003.
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
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321
[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 & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
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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
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
This from "ask an income tax and immigration and bankruptcy 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, South Africa, Thailand, Indonesia, Egypt, Antarctica, 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.
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