Sir,
I am a Canadian citizen employed by a US company. I
have been contributing along with my employer to the company 401K plan for
a number of years now (19). For those years Canada has been taxing my part of
the total contribution as taxable earned income and adding these to the amount
shown under "Wages, tips, other compensation" on my US W2 Wage & Tax
Statement. There has been no US tax paid on these contributions.
My question is: Will Canada tax this money again
under the terms of the US/Canada tax treaty when I retire and commence
withdrawing amounts from the 401K plan. I understand that the US will
apply a withholding tax as per their own tax rules, however I do not know if
Canada can double dip under the rules of the treaty.
Thank you in anticipation of a
reply.
--------------------------------------------------------david ingram replies:
You will be paying 15% tax to the US on the amounts coming out of your US 401(K).
This 15% is then deductible as a foreign tax credit on your Canadian tax return.
The part that you are being returned where you did not get a deduction has to be isolated out of the blended payments and can be claimed tax free in Canada but you will not get credit for the 15% tax paid to the US so it 'is' Double Taxation.
I think but am not yet sure that an amendment to the Tax Treaty on Sept 21 will allow you to deduct the US 401 K on your Canadian return but until the CRA releases its Technical notes on the new amendments to the treat, I will not be sure.
Anyone else with an opinion?
-----------------------------------------------
David Ingram wrote:
However, I regularly search for the words"PAYING
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$1,700 would be for two people with income from two countries
Catch - up returns for the US where we use the Canadian return as a guide will be $150 to $500.00 depending upon numbers of bank accounts, RRSP's, existence of rental houses, etc.
Just a guideline not etched in stone.
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 advice on bankruptcy
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. e bankruptcy
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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 AND YOU TRULY WANT OR NEED AN ANSWER, 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. expert US Canada Canadian American Mexican Income Tax help.
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tax & immigration help to non-resident Americans & Canadians from
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This is not intended to be definitive but in
general I am quoting $900 to $2,900 for a dual country tax
return.
$900 would be one T4 slip one W2 slip one or two
interest slips and you lived in one country only (but were filing both
countries) - no self employment or rentals or capital gains - you did not move
into or out of the country in this year.
$1,100 would be the same with one rental
$1,300 would be the same with one business no
rental
$1,300 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.
$1,600 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
$1,700 would be for two people with income from two countries
$2,900 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 $175.00 up.
With a Rental for $375
A Business for $375 - Rental and business likely
$500
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.
Catch - up returns for the US where we use the Canadian return as a guide will be $150 to $500.00 depending upon numbers of bank accounts, RRSP's, existence of rental houses, etc.
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,
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