Subject: US Condo and Rental Expenses
Expert: [email protected]
Date: Saturday March 03, 2007
Time: 02:22 PM -0500

QUESTION:

We have a rental property in the US. Can I claim the property taxes paid on my condominium as a rental expense deduction on my Canadian taxes? Form T776 mentions only Canadian property taxes however, the general guide states that all expenses can be deducted.


--------------------------------
david ingram replies:

Anything that can be claimed on schedule E of the US return can be claimed on form T776

You need to do your Schedule E 1040NR first and then convert the US figures to the T776 on your Canadian return. If the condo is in Arizona, you would do a 140NR or if in Califormnia, a 540NR.

There is no state tax in Florida, Texas or Nevada, the other three popular places for a Canadian to have a rental US condo.

The difference between the two counties is the method of claiming depreciation. In the US, you MUST calculate thedepreciation and include it even if it creates a loss. The good news is that the operating loss caries forward as a future deduction agaisnt rent OR Capital Gains as opposed to non-resident losses in Canada which unfairly disappear into the ether.

In Canada, you do NOT have to claim it and if you do, can only claim enough to create a zero rental. Depreciation or CCA (capital cost allowance) as we call it can NOT be used to create or increase a loss.

Make sure that you do theUS returns, particularly if you are losing money. The penalty can be a minimum of $1,000 to $10,000 PLUS 30% of the gross rent for failure to file a US rental return by a non-resident.

We, of course, are ideally suited to look after these for you by fax, snail mail, email or courier.

Sirs
>
> Do you provide a service to recoup the 30% withholding tax from the IRS.
> If so what are your charges to do the work in total or to provide some advice to overcome the pitfalls (ie Article number of the Tax Treaty)
>
> -----------------------------------------------------------------------------------------
david ingram replies:

WE CAN PROVIDE THAT SERVICE but The 30% tax is only recoverable if you have in fact lost money in your gambling. oLDER QUESTIONS FOLLOW

QUESTION:

I recently had taxes withheld on slot machine wins in Reno, NV. I
understand, as a Canadian resident, that I can apply to have the taxes
refunded. Do I have to wait until the calendar year ends to apply?
Thanks!
=============================================
david ingram replies:

You have to wait until 2008 for a 2007 refund but you have to have gambling
losses to offset gains to get a refund.

The following is the answer to an older question.

As a non US citizen, you must file a 1040NR along with a form W7 to get an
ITIN (Individual Taxpayer Identification Number).

The following is a previous answer given in January to someone who had
received a W2G for a win of $1,200.

We can help you.
===============
older answer

For non-residents of the United States, the withholding is 30% of wins of
$1,200 or more. You would file a 1040NR to report the winnings and claim
your losses as itemized deductions.

Remember that reporting just your win of $2100 and claiming gambling losses
does not make sense. If you won $2,100 (or any other amount) and lost that
much, there were more winnings in between which should be reported even if a
slip was not issued.

Non-residents do not usually get a W2-G - they are issued a 1042-S

david ingram

IRS TAX TIP 2004-33

GAMBLING INCOME AND EXPENSES

Hit a big one in 2003? With more and more gambling establishments, the IRS
reminds people that they must report all gambling winnings as income on
their tax return.

Gambling income includes, but is not limited to, winnings from lotteries,
raffles, horse and dog races and casinos, as well as the fair market value
of prizes such as cars, houses, trips or other noncash prizes.

Generally, if you receive $600 ($1,200 from bingo and slot machines and
$1,500 from keno) or more in gambling winnings, the payer is required to
issue you a Form W-2G. If you have won more than $5,000, the payer may be
required to withhold 27% of the proceeds for Federal income tax. However,
if you did not provide your Social Security number to the payer, the
amount withheld will be 30%.

The full amount of your gambling winnings for the year must be reported on
line 21, Form 1040 or the equivalent line on form 1040NR. If you itemize
deductions, you can deduct your
gambling losses for the year on line 27, Schedule A (Form 1040). You
cannot deduct gambling losses that are more than your winnings.

It is important to keep an accurate diary or similar record of your
gambling winnings and losses. To deduct your losses, you must be able to
provide receipts, tickets, statements or other records that show the
amount of both your winnings and losses.

For more information on record keeping, see IRS Publication 529,
"Miscellaneous Deductions," or Publication 525, "Taxable and Non-taxable
Income." You may also want to check out Form W-2G or Form 1042-S and its
instructions and
Tax Topic 419, "Gambling Income and expenses." All are available on the
IRS Web site at www.irs.gov. You may also order free publications and
forms by calling toll free 1-800-TAX-FORM (1-800-829-3676).

Answers to this and other similar questions can be obtained free on Air
every Sunday morning.

Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier
Partners and I will be hosting an INFOMERCIAL but LIVE talk show called "ITS
YOUR MONEY"

Those outside of the Lower Mainland will be able to listen on the internet
at

www.600AM.com

Local phone calls to (604) 280-0600 - Long distance calls to 1-866-778-0600.

Old shows are archived at the site.

Expert: [email protected]
Date: Friday March 02, 2007
Time: 08:48 AM -0500

QUESTION:

I am a US Citizen, Working in the US, PR of Canada. When i file my US return I have been checking 'Married Filing Separate' for the last 9 years. Should I have been filing 'Married Filing Joint'? My husband is Canadian, working in Canada.

_____________________________________________________________________

david ingram replies:

If you are only reporting your income. then MFS is the correct way to do it. If you wanted to pay less US tax, then you should have been filing a joint return and deducting your husband's income on form 2555 or claiming a foreign tax credit on form 1116. If you have children, the 1116 is the way to go.

The big question is whether you are reporting your income to Canada. If you are living in Canada with your husband and commuting to work in the US, the MFS is likely the way to go because the US tax will be enough to wipe out the Canadian tax. If you are living in the US and not paying Canadian tax, then the Joint return is the way to go.

Either one might / could be the correct way.

> QUESTION:
>
> I a Canadian working on a TN visa in the US. Canadian tax ties severed for
> years. I bought a new house and want to rent my old house out (both in the
> USA). Can I do this? Thanks for the help.
> ____________________________________________________________________________
david ingram replies:

You can certainly rent out the old house but better watch out when it comes
to repairs, etc.

Technically, you can NOT clean, decorate, repair, paint or even collect the
rent legally.

You should hire a property manager to do all of that for you.

Now, do I know of a single case where a TN has been deported for renting out
a US house and doing repairs?? The answer is NO!. But then, I have likely
done 2,000 returns for TN visa holders since 1989 when the FTRA was signed.
I do not remember a single case where a TN was renting a US house out. Very
unusual circumstance.

Hi David,

I was doing some searching on the internet and saw your reply to a questions with this email address.
I was wondering if you can help me too.

My boyfriend (a Canadian Citizen) and I (a United States Citizen) are talking about getting engaged. We want to have the wedding in the United States, but after marriage, I will be moving to Canada. So, I was wondering where do I apply for a marriage certificate, is it in the US or in Canada? And what would be the best way for me to become a Citizen of Canada?

Please Advise.

Thank you,
Mimi
_________________________________________________________________________

david ingram replies:

Marriage is a state or provincial regulation. You would apply for your marriage licence in the stae or province where you want the marriage to take place. Your newhusband will have to sponsor you to Canada and you will find the paperwork below.

After living here fore three years as a Permanent Resident, you can and should apply for Canadian citizenship. There ae no disadvantages for you and you do NOT lose your US citizenship.

However, as a US citizen living in Canada, you will have to continue to file a US return every year. GOTO www.centa.com and read the Oct 95 newsletter in teh top left box and the US/Canada Taxation section in the second box down on the right hand side.

This older question will help
---------------------------------------------------------------------


QUESTION: I'm a Canadian citizen and just got married. My wife is a U.S. citizen. I would like to apply for my wife's permanent residence in Canada. I would appreciate if you can tell me the process and how long would it take.

Thanks in advance
===========================================
david ingram replies:

You will have to decide on whether to apply form within or without Canada.

Within would have her in Canada sooner but she can not work unless she has a work visa. If she has a university degree, she might qualify as a professional under Treaty NAFTA.

Basically to sponsor her, you need to fill in the following paper work. At the moment, it is likely taking up to 22 months and is processed through Buffalo New York

You can start the process by going to:
1. http://www.cic.gc.ca/english/pdf/kits/guides/3910e.pdf
This is a guide for sponsoring a US citizen spouse into Canada.
Publication 3910E
2. http://www.cic.gc.ca/english/pdf/kits/forms/IMM1344EA.pdf
This is the application form to sponsor - form IMM-1344A

3. http://www.cic.gc.ca/english/pdf/kits/forms/IMM1344EB.pdf
This is the sponsorship agreement - Form IMM-1344B

4. http://www.cic.gc.ca/english/pdf/kits/forms/IMM5481E.PDF
This is the Sponsorship Evaluation Form IMM-5481

5. http://www.cic.gc.ca/english/pdf/kits/forms/IMM5409E.PDF
This is a statutory declaration of a common-law marriage - FORM IMM-5409

6. http://www.cic.gc.ca/english/pdf/kits/forms/IMM5540E.PDF
This is the Sponsor Questionnaire - Form IMM-5540

7. http://www.cic.gc.ca/english/pdf/kits/forms/IMM5540E.PDF
This is an authority to release information - FORM IMM-5540

8. http://www.cic.gc.ca/english/pdf/kits/forms/IMM5491E.PDF
This is a document Checklist - Form IMM-5491

9. http://www.canadapost.ca/tools/docp/CIC/bin/hpm-e.asp
This is where you order your official receipt

10. http://www.cic.gc.ca/english/pdf/kits/forms/imm0008egen.pdf
This is your actual Application for Permanet Residence - FORM IMM-0008GEN

11. http://www.cic.gc.ca/english/pdf/kits/forms/imm0008_1e.pdf
This is your Background Declaration - FORM IMM-008_1

12. http://www.cic.gc.ca/english/pdf/kits/forms/IMM5406E.PDF
This is your additional family information - FORM IMM-5406

13. http://www.cic.gc.ca/english/pdf/kits/forms/IMM5490E.PDF
This is your spouse or conjugal partner questionnaire -= FORM IMM-5490

14. The Above PLUS a police report from your local police station (See the guide for details) applies to those being sponsored from the UNITED STATES. There is a separate brochure for every country. If you are reading this and are from any other country (Australia, Brunei, Austria, Venezuela, etc) goto

14 http://www.cic.gc.ca/english/applications/fc.html for other country guides.

15. http://www.cic.gc.ca/english/skilled/assess/index.html
This is the self-assessment test for an individual to determine his or her eligibility to immigrate to Canada without being sponsored by a spouse.

I know this will help you make your decision. If we can help you, remember, that is what we do for a living. In particular you should goto www.centa.com and click on and read US/Canada taxation BEFORE you come.

My_question_is: Applicable to both US and Canada
Subject: Newly weds, multi-nationals
Expert: [email protected]
Date: Sunday March 04, 2007
Time: 01:08 PM -0500

QUESTION:

Hello, we are both US citizens, working/residing in Canada on Temporary Work Permits. We were married August 12 2006. For all of 2006, I lived and worked in Canada, working for an American company, paid in USD into my USA bank account. HRSDC is not involved in my pay becuase I do not want to be paid in CAD into a Canadian account because I have too many ACH's set up through my USA account (auto loan, insurance payments, etc). USA Federal, State and Local taxes were witheld from my paychecks; I maintain a USA address for my paystubs and taxes.

My wife moved to Canada and began work for a Canadian company August 28, 2006; she is paid in CAD into our TD account (obviously she will pay Canada taxes). She worked in the USA before we were married and also must file with USA for that time period.

We have several questions:
1. Do I pay USA or Canada taxes? Both?
2. Are we required to file joint taxes? How do we file joint if I am paying USA tax and she is paying Canada?
3. Do you prepare USA and Canada taxes?



-------------------------------------------------------------------------------------------------------
david ingram replies;

1. I do not want to be rude BUT YOU have made a BIG mistake having US federal, state, FICA and Medicare taxres withheld. In fact, the Human Resources and Payroll people at your employer should be severely reprimanded for allowing you to continue in such a precarious position tax wise. If you don't or didn't know better, they should have. Canada is a soveriegn nation and when you got your work permit and worked in Canda you were subject to Canada's federal and provincial income tax laws first and should have been paying CPP and EI and federal and provincial income taxes, NOT US TAXES OF ANY KIND. YOUR EMPLOYER IS LIABLE FOR CANADIAN penalties for failing to make the dedcutions. In my opinion (and I have seen it many times) they should reverse it all now and file amended T4 slips for Canda and amended W2 slips for the US. I do not know what state you have had withheld but I assume that your payroll people are intelligent enough that they would deduct New York state tax if if you were living and working in New York and not Colorado or North Dakota taxes because you happened to have a mailing address there. Believe it or not, The same thing applies to Canada, even more so.

You do NOT owe any state tax, will not owe any Federal Taxes (because of foreign earned income exemptions and foreign tax credits) and should not be paying FICA and Medicare if you are not living and working in the US when you ARE living in and working in Canda which has both an Income Tax Treaty AND a Social Security Treaty with the US. The tax Treaty makes you taxable in Canada first and the Social Security Treaty makes you pay Social Security taxes in Canada FIRST unless your company wirtes to the Canada Pension Plan department, explains that you have been transferred to Canada temporarily (for five years or less) and get written permission from the Canada Pension Plan people to exempt you from CPP. .

YOU DO OWE CANADA INCOME TAX and will have to pay it before getting any refund from the US anbd therefore will likely have a cash flow problem.
.
Your wife also owes Canada its income tax first.

THEN, because you are US citizens you must report the income to the US again. You then have two choices with regard to calculating any US tax liability. You have been in Caanda for an entire year so you can exempt up to $82,400
on form 2555. That's the end of it at less than $82,400. If your income is over $82,400, you can either file form 1116 and claim a foreign tax credit which should be enough to wipe out any US tax or a combination of form 2555 and 1116 which is almost always enouhgh to wipe out every cent of US tax.

Ditto for your wife although if she has not been in Canda for the full year of 2006, she may want to file form 2350 first to extend her US filing date to Jan 2008 so that she can qualify for form 2555. OR, she might just file form 1116 and claim the foreign tax credit.

2. You are NOT paying US tax she Canadian. You are both paying Caandian Tax. You can file a joint return or individual returns as MFS (married filing separately). It is likley easier to file MFS for the purposes of claiming the exemptions and yours is a tough return because you will owe about $5,000 more overall if you cannot get the W2 reversed into a T4 slip. GOTO www.centa.com and read the Oct 95 newsletter in the top left hand box and the US/Canada Taxation section in teh second box down on the right hand side for 30 pages or so more information about what has to be done for your returns.

3. We do US Caanda Tax returns by fax, email (pdf files only), snail mail or courier.

Dear Sir,
Question

I have been working in California for the 5 years on H1 visa and have 401 plan(about 40K)
What should I do with this plan , when I will move to Canada ( I'm a PR.)
Move it to IRA or other option .
Thank you very much

_____________________________________________________________________________________

david ingram replies:

------------------------------------------



QUESTION: Hello,

In the US since 2001 and there is a 50-50 chance I will move back to Canada
in 2007 or beginning of 2008. What should I do with the following:

1.401K : I have a 50K+. Should I let it grow? Rollover in a IRA? should I
withdraw when I know for sure that I will move back? (I heard you can
rollover an IRA or 401K into a RRSP) what are the tax implications?

2. In the event I move to Canada, can I use my 401k or IRA toward the
purchase of my first home and not be taxed on my withdrawal.(I currently
rent in the US and never bought a property in Canada) Will the US recognize
a property bought in Canada as eligible for the first time home buyer
program?

3. We wanted to contribute to a Coverdell education saving account this year
for our first child. Will Canada tax me upon distribution?

4. Is there a best time to move back to Canada, (late 2007 or beginning of
2008)

Thank you for your time
----------------------------------------------------
david ingram replies:

Your 401(K) can be rolled to an IRA. Your IRA can then be rolled into an
RRSP but the US will not recognize it as a rollover and want to penalize you
10% for early withdrawal if you have not yet reached the exalted age of 59
1/2 at the time of withdrawal.

By buying a house, you can exempt up to $10,000 of the withdrawal from the
10% penalty.

Rolling it into the RRSP involves reporting the IRA as income on your
Canadian return and then claiming the deduction for the rollover. Because
the tax paid to the is a foreign tax credit in Canada, you get to claim the
tax paid to the USA against other income in Canada.

Therefore, it is necessary to have significant other income in Canada for
you to get the equivalent of a tax free rollover. In other words, do NOT
move to Canada at the end of a year. You should move at the start of a
year, i.e. Jan 15 to May 15 or so that you can get a lower tax rate on your
IRA withdrawal in the USA and maximum benefit for the foreign tax credit in
Canada.

Done properly, and with the RRSP money in the account long enough in Canada,
you can then withdraw up to $20,000 Canadian (tax deferred) to use as a down
payment on your Canadian house.

------
the following previous email talks about it as well.


QUESTION:

worked in CA for 4 yrs. returned to BC in Apr.'04. Need to transfer my
retirement fund but having difficulties with bank and credit union. US
specifies that I must roll it over to IRA accounts (Individual retirement
account. I do not want to be subject to the 20% withholding fee for IRS.
What would be the best way to get the funds to me here in Canada.
=======================================
david ingram replies:

1. move it to an IRA and leave it there in one of the world's strongest
economies. Most financial advisors are trying to get "more" of their
clients' money into US funds.

2. If you just have to have it in Canada, you have to cash it in in the
US and pay your tax to the US. take what is left, add the amount (even if
borrowed) of the tax you paid to the US and buy your Canadian RRSP. That
will give you a tax deduction which should be larger than the tax you paid
to the US.

When you get the refund, pay back the loan. You will have transferred the
money quite handily.

The amount you took out is also taxable on your Canadian return. Pay that
tax with the tax you paid to the US as a foreign tax credit.

You will likely need help.

Don Walkow of Seabank Capital Management in Surrey, BC is one Canadian who
can help you with the process while you are still in the United States. His
licensing allows him to deal with 401(K) plans, IRA's, RRSP's and straight
securities in any state in the US - He is one of two people I know of who
can do this. - His North American telephone number is 1-800-541-9952 and you
can find out more at www.seabankcapital.com.

Darrell Thompson of Blackmont Securities is the other person and is located
in Toronto. His phone number is 866-775-7704

If you are in Canada and in BC in particular, Fred Snyder, host of "Its Your
Money" every Sunday Morning from 9:00 to 10:30 AM Vancouver Time can also
look after you but can NOT talk to you if you are in the US. (999 out of
1,000 other Representatives in Canada can NOT talk to you either). You can
listen to this Canadian Program (I am a guest on the fourth Sunday of every
month) live at www.600am.com.

----------------------------------
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.

Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth
Management and I will be hosting an INFOMERCIAL but LIVE talk show called
"ITS YOUR MONEY"

Those outside of the Lower Mainland will be able to listen on the internet
at

www.600AM.com

Local phone calls to (604) 280-0600 - Long distance calls to 1-866-778-0600.

Old shows are archived at the site.

QUESTION:

Hi David. I am a Canadian living in Mexico with a Mexican Visa. I have no income from Canada. I have invested in a Mexican Co. via a Mexican broker that trades on the Mexican Stock Market.

How should I treat the profit from this investment. Thank you and I appreciate all the work you put into this forum.


___________________________________________________________________________

david ingram replies:



I passed this question to my associate David Holroyd (a US – Canada - Mexico consultant) who still spends half the year in Mexico and lived in Guadaljara for 10 years or so.



David Holroyd replies:



Since he is a Mexican resident and the money comes from Mexican sources

the SHCP has the right to tax this income.



There are specific headings on the Mexican forms for interest and dividends. The problem comes with

capital gains, for which there does not appear to be a separate heading.





The taxpayer could lump them in with dividends. If the questioner does

not already have a number for the Registro Federal de Contribuyentes he

has to go to his nearest Hacienda (SHCP) office and apply for one.



He will receive a CURP number at the same time. The number from the RFC and

CURP will both be shown on the tax form. Unfortunately he will then have

to file regular reports every 2 or 3 months to report his investment income.

QUESTION:

Hello, I'm a registered non-resident Canadian living and
working in South Korea. I've been a non-resident for
about 8 years now and about 3 years ago I opened up an
account at Canaccord Capital, Vancouver so I could build
up a portfolio of mining stocks. Hypothetically, if I was to
make a million dollars and cash out, my Canadian
> stockbroker said he could send the million dollars (minus
> his commissions of course) to me in Korea without taking
> any tax off. My broker said he could send the full amount
> but he couldn't answer any questions related to my tax
> liability in Canada. So my question is, 'do I have to pay
> taxes on profits made on Canadian stock exchanges as a
> Canadian non-resident living in South Korea. If I have to
> pay substantial taxes, is there anything I can legally do to
> reduce these taxes? Thank you.
>
> _________________________________________________________________________
david ingram replies

Non-residents of Canada do NOT pay tax on profits in the trading of Publicly
Traded shares on Canadian Stock Exchanges.

Non-residents of the US do NOT pay tax on profits in the trading of publicly traded shares on US stock exchanges UNLESS they are US citizens..

However, if you were to be participating in seed shares of a private corporation, the profits would be taxable.