Ok my head is swimming because of this new reporting form and understanding the tax implications of purchases and sales of securities in my RRSP and how to account for this in the form 8891. To start off, my wife and I moved from Canada to the US in early 2000 when I was transferred with my job. At that time we managed to establish book values for the securities in our self directed RRSPs. Since then we have traded a few stocks and sold and bought some mutual funds all within the RRSPs. We have not withdrawn anything from these accounts. We do not file Canadian Income Tax. Both my wife and I are resident aliens (we have green cards) and are starting the process to become US citizens. Now comes the headache in the form of the 8891 mainly because of exchange rates. From what I can see there are two possible ways to calculate any capital gain or loss on the sales of a security (stock or mutual fund) for reporting on this form. OPTION 1: Calculate the gain or loss in Canadian dollars and then use the exchange rate to translate this to US dollars. Example: Buy Security ABC @ $100 Cdn in 2000 Sell Security ABC @ $100 Cdn in 2006 Capital gain = $0 Cdn FX at time of sale = .87 US capital gain = $0 OR OPTION 2: Calculate the US value of the stock at the time it was bought, and recalculate the value at the time it was sold. The difference becomes the capital gain or loss. Example: Buy Security ABC @ $100 Cdn in 2000. FX = .66 US Value = $66 Sell Security ABC @ $100 Cdn in 2006 FX = .87 US Value = $87 Capital gain to report: $21 (equivalent to a 32% gain) but this is only due to exchange rate changes. Which is the correct way to perform the calculation? Option 1 or Option 2? (Please tell me it is Option 1) By the way, I had to file an extension for my US income tax in order to figure this one out.-----------------------------------------------------
david ingram replies:
Option 2 is correct. Too bad you are not in Vancovuer this weekend,
I am giving a FREE 2 hour seminar on the proper reporting for forms 8891 and TDF-90 at 3:00 PM at the HOLIDAY INN at 711 West Broadway as follows.
I charge $400 for an individual consultation on this subject by phione or in person. However you are in luck.
Leave Sunday, August 12th open. I will be conducting a FREE three part seminar on that date at the Holiday Inn at 711 West Broadway in Vancouver..
12 noon to 2:30 PM - Mortgage Interest as a deduction including Singleton (won), Overs (won), Evans(won) and Lipson (lost) Cases.
3 PM to 5 PM - Reporting rules for US persons with Canadian Financial Accoutns and Canadian RRSP accounts.
simply put a US citizen with no US income whatsoever is supposed to file a US tax return no matter where they live in the world.
More important than that, is the fact that if the US citizen has a Canadian RRSP, it is considered a foreign trust. Assuming that there is more than
$10,000 US in all the US persons foreign accounts, failure to report the foreign trust (RRSP) to the IRS AND the Departmetn of the Ttreasury
can result in minimum fines of $10,000 (per foreign account) and maximum fines of $500,000 plus 5 years in jail plus 35% of the money in the
RRSP plus 5% for every year not reported. - O U C H !!!
5:30 to 7:30 PM US Tax returns - who has to file - aimed at Canadians who have been working in the US and Americans living in Canada or Canadians with
rental property in the US on which they are losing money. Snowbirds should attend this as well if they are in the USA more than 120 days a year.
Anyone intending to attend this seminar about mortgage interest or when a Candian has to file a return should read the November 2001 newsletter for mortgage interest and information about what Canadians have to file a US return. See the November 2001 Newsletter at www.centa.com in the topp left hand box.
If they are a Snowbird, they should read the April 1994 newsletter.
If they are a dual citizen, the Oct 1993 newsletter - These can be found at www.centa.com in the top left hand box.
Then anyone who is filing both returns should go to the second box down on the right hand side and read the US/Caanda Taxation section.
Print the above out. Highlight questionable sections and bring them along to the seminar so you remember your questions.
-----------------------------------
Those interested in the mortgage interest as a deduction concept should also read Fraser Smith's, "The Smith Manoeuvre", available at any good bookstore although you may need to have them order it for you.
Phone (604) 731-8900 to register for all or any of the seminar.
---------------------------------------------------------------------------------------------------------------
It is very unlikely that blind or unexpected email
to me will be answered. I receive anywhere from 100 to 700
unsolicited emails a day and usually answer anywhere from 2 to 20 if
they are not from existing clients. Existing clients are advised to
put their 'name and PAYING CUSTOMER' in the subject and get answered
first. I also refuse to be a slave to email and do not look at it
every day and have never ever looked at it when i am out of town.
Therefore, if an email is not answered in 24 to 36
hours, it is lost in space. You can try and resend it but if
important, you will have to phone to make an appointment. Gillian
Bryan generally accepts appointment requests for me between 10:30 AM
and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles)
time at (604) 980-0321
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:
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:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office)
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, preparation, or consultation in connection with
personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be
included."
David Ingram
gives expert income tax & immigration help to non-resident
Americans & Canadians from New York to California to Mexico
family, estate, income trust trusts Cross border, dual citizen - out of
country investments are all handled with competence & authority.
Phone consultations
are $400 for 15 minutes to 50 minutes (professional hour). Please note
that GST is added if product remains in Canada or is to be returned to
Canada or a phone consultation is in Canada.
This is not intended to be definitive
but in general I am quoting $800 to $2,800 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
$1,600 would be for two people with income from two countries
$2,800 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 two or three slips and
no capital gains, etc. for $150.00 up.
With a Rental for $350
A Business for $350 - Rental and
business likely $450
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 $800 and up.
TDF 90-22.1 forms are $50 for the
first and $25.00 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.
This from "ask an income trusts tax and immigration
expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily basis with expatriate tax
returns with multi jurisdictional cross and trans border expatriate
problems for the United States, Canada, Mexico, Great Britain, United
Kingdom, Kuwait, Dubai, Saudi Arabia, Thailand, Indonesia, Japan,
China, New Zealand, France, Germany, Spain, Italy, Russia, Georgia,
Brazil, Peru, Ecuador, Bolivia, Scotland, Ireland, Hawaii, Florida,
Montana, Morocco, Israel, Iraq, Iran, India, Pakistan, Afghanistan,
Mali, Bangkok, Greenland, Iceland, Cuba, Bahamas, Bermuda, Barbados, St
Vincent, Grenada,, Virgin Islands, US, UK, GB, and any of the 43 states
with state tax returns, etc. Rockwall, Dallas, San Antonio Houston,
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Immigration Tips, Income Tax Immigration Wizard Antarctica
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Non-Resident Real Estate tax specialist expert preparer expatriate anti
money laundering money seasoning FINTRAC E677 E667 105 106
TDF-90 Reporting $10,000 cross border transactions Grand Cayman Aruba
Zimbabwe South Africa Namibia help USA US Income Tax Convention
David Ingram expert income tax and immigration help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty
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