Hello: I live full time in Canada, work seasonally in the USA..
is it true that the tax treaty does not apply to me because I am
a US citizen? Thanks for your time.. I have heard this but can
not find any info stating this...
--------------------
david ingram replies:
I do not understand the question. The tax treaty applies to US
and Canadian Citizens and residents.
It is designed to deal with you.
david ingram
--------------------------
I am a US citizen residing in Canada legally for the last 10
years, work at a golf course in the USA seasonally and planned on
using the treaty to keep from paying the US taxes, both federal
and state..in the past I was paid back all taxes deducted. I
then filed in Canada and paid the taxes here.
Yesterday an IRS fellow said that because I am a US citizen I
cannot do this. I have to pay the federal and state taxes, and
then Canada would give me credit for the taxes paid with the
foreign tax credits. I don't usually trust what I hear from just
one person so I was getting a second opinion.
Hope this makes more sense.
thanks
-------------------------------
david ingram replies:
As a US citizen living in Canada, you are required to file a US
1040 reporting your world income every year. This would
include any US wages, Canadian wages, US interest, dividends or
rents, Canadian interest, dividends and rents, royalties,
gambling winnings in either country, alimony, Unemployment
insurance, company pensions, Social Security, Old Age Pension,
Canada Pension Plan, real estate capital gains profits and a
dozen other things.
Articles XI (interest), X (dividends), XV (wages), XIV (self
employment), XVIII (pensions) and some other parts of the US
Canada Income Tax convention may or may not apply to your income.
Article XIV for instance, only applies up to $10,000 of wages.
Articles X and XI are not applied directly to US citizens but are
matched in spirit by resourcing the income on the Foreign tax
credit to match the terms of Article X and XI.
For the treaty to exempt your income or seem to exempt your
income, you would have to be earning less than $10,000 US a
season which although possible if the job is only part time,
seems very low for someone working (for what I would assume to be
for five months) from May to the end of September.
I would file your tax return by reporting you r US income (and
any Canadian income) on your US 1040 which is your responsibility
as a US citizen.
Then I would report ALL of the same income on your Canadian
T1 --- I would claim a foreign tax credit on form 1116 of the US
1040 for any tax paid to Canada on Canadian Interest, dividends
or other Canadian income. On the Canadian return I would claim
credit for the tax, Social Security and Medicare paid to the US
on the US wages on line 431 of Schedule 1 of your T-1 General.
If you did have any Canadian wages, you could exempt up to
$80,000 US by filing form 2555 with your 1040.
As a US citizen in Canada, you would get a lot (I think) by
reading my October 1995 Newsletter (top left hand box at
www.centa.com) and the US Canada Taxation section in the second
box down on the right hand side at www.centa.com. If you are
interested in the aspects of dual citizenship, read the October
1993. newsletter as well.
-------------------------
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa
Specialists
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North Vancouver, BC, CANADA, V7N 3L7
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Disclaimer: This question has been answered without detailed
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comment. Nothing in this message is or should be construed as
advice in any particular circumstances. No contract exists
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duties are expressly denied. All readers should obtain formal
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