If this lady (see older question below) doesn't have any tax
liability to the US then why does my wife have to file with the
IRS (She's American) when she hasn't earned a penny in the US in
the last 26 years? We live in BC and have never earned income in
the US but you have stated in the past that US citizens must file
their Canadian income with the IRS and possibly have to pay the
IRS taxes on their Canadian income. What gives?
XXXX
Abbotsford
========================
david ingram replies:
Your wife is a US citizen - US citizens have to fill out a US
tax return no matter where they live in the world. The first
$80,000 is exempt but the tax return still has to be filed.
After the $80,000 (US$) exemption, other income is subject or
eligible for the Foreign Tax Credit.
She would have to make over $110,000 US before there would be any
US tax liability and that would be because of AMT (Alternative
Minimum tax).
Nothing has changed except the imposed penalties are larger for
not filing.
The penalties themselves have not changed, just the enforcement
since Sept 11, 2001.
----- Original Message -----
From: centapede at lists.centa.com
To: CENTAPEDE
Sent: Wednesday, September 01, 2004 9:42 PM
Subject: [Cen-tapede] Canadian citizen (living in Vancouver
British Columbia Canada) working for US company - ask an
International real estate mutual funds immigration income tax
expert experts - David Ingram 's CENTA Services in North
Vancouver BC Canada AM600 Radio
QUESTION:
Hello,
I have exhausted all of my efforts in trying to find a
straightforward answer to my (now) dilemna.
I am a Canadian citizen living in British Columbia. I recently
got offered a job by a US company (in the US) and they do not
require me to re-locate. I am able to work from home and stay in
Canada. I will be paid US dollars and will be considered a
full-time employee of the company vs. a sub-contractor.
Through my numerous previous research efforts, I have obtained
the following information:
- I only need to get an ITIN (US Tax identification number via
form W-7) in order for the US company to withhold my taxes.
- The US company also sent me forms W-4 and I-9 to complete.
This should have been fairly straightforward. I fill out the
forms, have US taxes withheld and claim them back next tax season
with the IRS.
However, the IRS now will not give out ITINs without a tax return
being filed.
There is now discussions of the US company requesting me to
possibly obtain a TN work visa (but still reside in Canada) only
for the purpose of being able to get a Social Security Number so
that I can file US taxes. If I do this, will I not be taxed
dually?
Is there a much simpler solution to this problem? I have
suggested to my US employer that they pay me (no taxes withheld)
till year end, issue me a W-2 next year and I will pay all taxes
due to the IRS myself and then apply for my ITIN at the same
time. Is this a feasible solution?
Many thanks for all your time and assistance!
Susana
======================================
david ingram replies:
NO NO NO NO NO!
If you are working in Canada and living in Canada, there is
absolutely NO US tax liability. Your ONLY income tax liability
is to Canada.
Your company has two choices.
1. The easiest is to pay you as a self-employed contractor.
They will pay you a contract amount equal to what would be your
salary PLUS their half of the Social Security and Medicare and
any amounts that they would usually pay to your pension or 401
plan (K, B, etc.), and any other incentives that might exist.
They would not issue you any IRS documentation other than maybe
give you a statement at the end of the year stating that they had
paid you "x" number of dollars.
You would file your return next year as a self-employed person
and pay both halves of CPP and your income tax. You could buy
(and they could pay you extra for it) your own group medical
cheaply by joinng the local chamber of Commerce or the Vancouver
Board of Trade.
OR
2. They could get a Canadian Employer's number from the CRA.
You could look after your own payroll or we (or a 100 others)
could do it for you. You would make deductions for EI
(Employment Insurance), CPP (Canada Pension Plan) and Income tax.
The company can join the local Chamber of Commerce or the
Vancouver Board of Trade to buy you a Canadian Group benefits
plan.
You, we, or the company would then file a Canadian T-4 slip for
you by Feb 28th, 2005 for the 2004 tax year.
There is NO US tax liability for you if you are not physically
present in the USA when performing your duties for the US
company.
Answers to this and other similar questions can be obtained free
on Air every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of
Cartier Partners and I will be hosting an INFOMERCIAL but LIVE
talk show called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the
internet at
www.600AM.com
Local phone calls to (604) 280-0600 - Long distance calls to
1-866-778-0600.
Old shows are archived at the site.
This from ask an income tax immigration planning and bankruptcy
expert consultant guru or preparer 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 gambling
refunds 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,
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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.
income tax wizard wizzard guru advisor advisors experts
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preparer of Alaska, Alabama, Arkansas, Arizona,
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Texas Taxman and Tax Guru and wizzard
wizard -
David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road (Personal residence by appointment only
please)
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 Fax (604) 980- 0325
davidingram at shaw.ca 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 y
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