My_question_is: Applicable to both US and Canada
Subject: How do i report this situation?
Expert: taxman at centa.com
Date: Thursday January 11, 2007
Time: 08:12 PM -0500
QUESTION:
I departed from Canada 2005 June and i followed all the protocols to declare
myself as non-resdient and I live in USA at the moment. I have the non-RRSP
investment with manulife. The investment has grown and i know the value when
i departed from Canada. I still pay the monthly interest on the money
borrowed to buy the investment. How do i report this now in USA and for
canada non residency filing.
Thanks
----------------------------------------------------
david ingram replies:
I doubt that you followed all the protocols for 2005. If you had, you would
not be asking me this question for 2006 because there is less to do for 2006
than there was for 2005.
When leaving Canada, the Manulife Investment should have been reported on
Canadian form T1161. Failure to have filed the form by April 30, 2006 is a
fine of $2,500. (100 days at $25.00 a day to a maximum of $2,500) Form 1243
and 1244 should likely have been filed as well.
You should have told Manulife that you are a Non-Resident so that they will
deduct 10% of any interest and 15% of any dividends paid to you in 2005,
2006, 2007 and onward.
No Tax is payable to Canada on any Capital Gains earned AFTER you left
Canada.
Because you notified Manulife that you were a non-resident and they deducted
the proper tax, there is NO requirement to file a Canadian tax return for
2006 and the second half of 2005.
For the US, you needed to file form TDF 90-22.1 for the Manulife Account
(and another one for each other financial account you have in Canada). You
needed to check off "yes" to the question about foreign accounts on the
bottom of the Schedule B attached to your 1040.
Any interest and / or dividend earnings from the Manulife Account are
reported on US Schedule B.
Any capital gains on the Manulife Account are reportable on US Schedule D.
Any tax paid to Canada can be claimed (usually dollar for dollar) against US
tax by completing Schedule 1116.
----------------------------
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