Sent: Wednesday, January 25, 2006 7:05 PM
To: taxman at centa.com
Subject: US/CDN Taxes
Good Afternoon!
I am a US Citizen who has become a permanent resident of Canada
during the 2005 tax year. I commute to work in the US, earn US
wages and have taxes withheld in the US, but I live with my
husband in Canada. My husband (whom I married during the 2004 tax
year) is a Canadian citizen (and resident) and works and pays
taxes in Canada. I have a SSN and a SIN, while my husband only
has a SIN and is not eligible for a SSN (but does not yet have a
TIN). We have NO idea how to file our taxes this year, and with
which government (both, I assume). Is this the type of
cross-border tax issue that you can help us with? How can we get
started?
Sincerely,
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david ingram replies:
Because you are working and earning the money in the USA, your
first tax liability is to the USA and whatever state you are
working in.
Your second tax liability is to Canada where you will file a T1
of your own (Canada does NOT have a joint return). You will
convert all of your US earnings to Canadian dollars and report
the money in Canada, likely on line 104 with an explanation. It
would go on line 104 rather than 130 so that you qualify for RRSP
contributions although I would likely recommend that you do NOT
buy an RRSP.
You would report all of the tax, Social Security (FICA) and
Medicare you paid to the US as a foreign tax paid on line 431 of
schedule 1 and any left over amount would be credited on the same
equivalent line of your provincial 428 after filling in form 2036
which is the Provincial foreign Tax calculation form. You can see
a form 2036 here:
http://www.cra-arc.gc.ca/E/pbg/tf/t2036/t2036-05e.pdf
The Net income earned from the US that you had put on line 104
would also go on lines 433 of Schedule 4 and the equivalent line
of Form 2036.
If as I suspect, you are working in Washington State, there will
be no state tax to take credit. If on the other hand you are
living in Windsor, Ontario or St Stephen, New Brunswick and
commuting to Michigan or Maine (or any other similar situation),
then you would also include the state tax paid on line 431.
If you "are" paying state tax, it is likely better for you to
file a joint return which you have the option of doing.
I expect that your 2004 return is incorrect, based on your
question.
We can handle the returns for you in person or by email, mail,
fax or courier.
If you goto www.centa.com and read the "US/Canada Taxation"
section in the second box down on the right hand side, you will
find out lots more about US / Canada Taxation.
----------------------------------------
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
US / Canada Real Estate Specialists
Home office at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 10 PM 7 days a week (please do not
fax or phone outside of those hours as this is a home office)
email to taxman at centa.com
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 for expert help, assistance,
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