taxation and tax deduction for US

Subject:        taxation and tax deduction for US citizen working in the US
but living in Canada
Expert:         taxman at centa.com
Date:           Wednesday October 25, 2006
Time:           07:33 PM -0400
QUESTION:
My situation is a bit complicated.  I am a US citizen, got married to a
Canadian, moved to Canada and just have become a permanent resident in
Canada.  However, I continue my employment with a US-based company (located
in the US as well).  Here are my questions.
Question 1:  I understand that I continue to file a US income tax returns
and not in Canada.  Is that correct?
Question 2:  I have a substantial bank account with a CAnadian bank.  Where
should I file interests gained from such account?  (I did file a declaration
of the bank account with the US treasury branch).
Question 3:  Do I get a tax break if I buy a property in Canada?
Thank you very much.
------------------------------------------------------------
david ingram replies:
1.	Incorrect.  As a resident of Canada, you are taxable on your world
income. As a US citizen, you are taxable on your world income.
2.	You will pay tax to Canada first on the interest and the US second.  You
will claim a foreign tax credit for the tax paid to Canada on the interest
by filling out US form 1116.
3.	Canadian Property tax and Canadian mortgage interest are both deductible
on your US return and you can arrange your affairs to make your Mortgage
interest deductible on your Canadian return. goto www.centa.com and read the
November 2001 newsletter in the top left hand box.
4.	If you are performing your services in Canada, you will be taxed in
Canada first on those earnings and the US second.  You will have a choice of
exempting up to $80,000 US on your 1040 by filling out form 2555 or claiming
a foreign tax credit by filling out another 1116. In either case, you should
go to www.centa.com and read the Oct 95 newsletter as above and the
US/Canada taxation section in the second box down on the right hand side.
5.	You should also take out Canadian citizenship as soon as possible.  There
are NO known disadvantages and the advantages are numerous.  Read the Oct
1993 newsletter on dual citizenship.
And of course, we look after these returns for you.
Phone consultations are $400 for 15 minutes to 50 minutes (professional
hour).
This is not intended to be definitive but in general I am quoting $800 to
$2,000 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you
lived in one country only - no self employment or rentals or capital gains -
you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 would be the minimum with a move in or out of the country. These are
complicated because of the back and forth foreign tax credits. - The IRS
says a foreign tax credit takes 1 hour and 53 minutes.
$1,500 would be the minimum with a rental or two in the country you do not
live in or a rental and a business and foreign tax credits  no move in or
out
$2,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection
period) with a three or four slips and no capital gains, etc. for $125.00
up.
With a Rental for $300
A Business for $300 - Rental and business likely $400
And an American only (lives in the US with no Canadian income or filing
period) with about the same things in the same range with a little bit more
if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS
be $400 and up.
TDF 90-22.1 forms are $25 for the first and $10.00 each after that when part
of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after
that.
Just a guideline not etched in stone.
-------------------
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at:
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North Vancouver,  BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
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Calls welcomed from 10 AM to 10 PM 7 days a week  Vancouver (LA) time -
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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
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