I am a dual US/Canadian living and working in Canada.
In 2004 I made more than 80k which I beleive is the amount where I now need
to file US Income tax. I also own a vacation property in the US that I pay
property taxes on.
Do you provide assistance with tax preparation and advice for individuals
in my situation?
Sxxxx
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david ingram replies:
The rule is NOT that you do not have to file a US tax return until you make
over $80,000 US.
You have to file a US tax return at any amount of earnings and claim "up to"
$80,000 as an exemption. If you make $60,000 and do not file the tax return
within two years and get "caught" the IRS can charge you the tax without
allowing foreign tax credits. Ten year old legislation does allow you to
claim the exemption retroactively, but you have to qualify for the exemption
and if there was a sale of stock, mutual funds or any other capital gains or
dividend income or an RRSP, you can still be held liable for tax and serious
penalties on income other than earned income.
I do provide the kind of service you require. You can go to www.centa.com
and read the US / Canada Income Tax section on the right hand side.
The following was my answer to another similar question.
============================
My_question_is: Applicable to both US and Canada
Subject: Dual Citizenship - Filing & Estate Taxes
Expert: taxman at centa.com
Date: Monday January 10, 2005
Time: 06:26 PM -0800
QUESTION:
I was born in Canada in 1936 and I have been a resident of Canada all my
life. I was educated and employed only in Canada. I have a few investments
in Canada including RRSP's. I have been submitting Canadian taxes for over
50 years. I have never filed an IRS return and plan not to. I plan to die in
Canada. I have NO investments in the US and receive NO benefits or income
from the US. I visit the US occasionally. My father was born(1902)in the US
and he immigrated to Canada at the age of 2. In 1987 I obtained US
citizenship and therefore I have both Canadian and US citizenship.
I have reviewed the following IRS publications: 901,597,514,593 and a few
more. They all appear to refer to a US citizen only and are not applicable
to my situation. I am aware that the US estate tax exemption this year is
$1.5m, etc.etc.
Are there any tax treaties that exempt me from filing with the IRS?
Thanks,
========================================
david ingram replies:
Sorry,
When you invoked your right to US citizenship (you were always a US citizen
even if you did not know it), you agreed to file US income tax returns for
the rest of your life.
There is no tax treaty that exempts you from the legal requirement to file
your US Tax returns.
In fact (as an example), if you were a single 62 year old earning $100,000
Canadian a year with normal deductions at work, no RRSP or Union deductions
or any other sources of income, you would have an absolute mandate or
obligation to file the US return and NO LEGAL OBLIGATION to file the
Canadian return unless you received a specific request or demand from the
CRA (Canada Revenue Agency).
The reason is simple. You do not "have" to file a Canadian Tax return
unless YOU OWE TAX. In this case, there would usually be a tax refund of
about $600.00. If you do not file the return, you do not owe anything.
At the same time, you would absolutely owe about $15,000 US tax to the US
government (depending on the exchange rate) if you do not file your return.
If you "DO" file your US return, you can exempt up to $80,000 US of earned
income and claim foreign tax credits for any tax on investments. There
would not likely be any tax if you filed but if you do not file they could
give you a tax bill and not allow foreign tax credits which are officially
cancelled after two years.
Oh yes, if you revoke your US citizenship, you would call attention to this
and the US government can simply request your earnings from the CRA and
issue a bill. AND, if you revoke your citizenship to avoid US income or
estate taxes, you are then banned from the US for life.
Sorry, but you should get your returns up to date for at least the last six
years (99 to 2004).
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 Dundee Wealth
Management and I, David Ingram 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 <http://www.600am.com/>
Local calls are taken at (604) 280-0600 and Long Distance calls are taken at
1( 866) 778-0600
=========================================
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