Date: Wednesday November 19, 2003 Time: 06:32 PM -0800 QUESTION: My husband and I are both US Citizens, and he is currently working in Ontario, Canada on a two year temporary work permit. We own a house in California, and recently purchased a house in Mississauga, Ontario. His salary is paid in Canadian dollars, and they take taxes from his payroll check. We are not sure how to file our taxes, and I have heard of the possibility of double taxation. Please advise on the best way to tackle this. Thank you. =============================================== david ingram replies: If you have bought a house, I presume that you are intending to stay more than two years. Here is what you will be doing. 1. First of all, for the year 2003 assuming that this is the year you have arrived in Canada, you will file US form 2350 to delay your 2003 return filing until January 2005. 2. When you do file, your US form will consist of a Joint US 1040 with a schedule A for itemized deductions and a schedule E to report the rent on your California House and a schedule 2555 to exempt up to $80,000 US of your Canadian earnings on pro-rated basis. Other schedules such as B for investments, C for self employed income and SE for self-employed Social Security payments might be required as well, depending upon your situation. The good news is that your Canadian mortgage interest and your Canadian Property taxes and Canadian medical and union dues and other expenses can be used as itemized deductions on your US schedule A. 3. Your California return will not be your usual 540, it will be a 540NR showing your part year residence in California. Your California return needs to be filed on time although a four month extension would make sense in this first year. You will also be filing (at least) California Schedules E and CA(NR). 4. Your Canadian return will be an "entering Canada" return and the date of your entry to Canada will determine the amount of your personal exemption amount. It is pro-rated by the number of days in Canada just as the US form 2555 is pro-rated for the $80,000 exemption amount. You will also have to report the California Rental on a Canadian Schedule T776. You are welcome to send your returns to me. At any moment, I am usually dealing with returns from twenty different states and countries. It is our specialty as opposed to many offices which may see one or two a year while we see a thousand returns like yours and are prepared to look after all the returns at the same time. Contact information follows: David Ingram's US/Canada Services US / Canada / Mexico tax and working Visa Specialists US / Canada Real Estate Specialists 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Res (604) 980-3578 Cell (604) 657-8451 (604) 980-0321 New email to [email protected] <mailto:[email protected]> www.centa.com <http://www.centa.com/> www.david-ingram.com <http://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 in connection with personal or business affairs such as at www.centa.com <http://www.centa.com> . 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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, the 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. Your name has been added to our list because of an emailed enquiry. At the moment there are some 200 unanswered questions and many are the same. To justify the time spent answering these questions I simply send them to the list. this has two advantages: 1. 3,000 other people sometimes give me a better idea or a better answer. 2.I do not answer the same thing five times in one week. This list was $125.00 a year from 1992 to 2001. It is free for the time being. However, if you do not want to be on it, just send back any message received with the word remove and I will be happy to remove you. Remember though, if you ask to be removed before your question gets answered, you will not get an answer because they go to the whole list to justify my time. david ingram - [email protected] <mailto:[email protected]> (604) 913-9133 - (604) 913-9123 www.centa.com <http://www.centa.com> Cell is (604) 657-8451 (10 AM to 10 PM seven days a week) US/Canada Real Estate Taxation Specialists US / CANADA / MEXICO Working Visa and Income Tax Specialists --- Outgoing mail is certified Virus Free. 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