QUESTION:
David just some info and advice you may want to share with your readers
Here are the facts. I have been a Canadian resident from January 2001 thru June 2008. In early June 2008 I contacted CRA at 1-800-387-1193 and notified them I was no longer entitled to CCTB & UCCB for my children because we moved to the United States in June of 2008 and thus not entitled to anymore payments for the remainder of 2008. The Agent took my information and said it will be processed. In late June I called back because according to My account online they where still issuing checks for CCTB and UCCB. This Second Agent stated that the information was in the system and that it some times takes up two 6 weeks to process. In the Middle of July 2008, Logged into My Account and noticed they where still processing these checks, I contact CRA for the 3rd time and spoke with a third Agent who said that he was not sure what happened but this should have been taken care of immediately by the other agents, he stated that everything will be taken care of. I logged into My acc
ount in Late July and saw that indeed the 3rd agent took care of the problem and checks where being stopped.
I received a Notice from CRA on September 26th stating that I owed all payments for CCTB & UCCB since July of 2005, and tax returns from 2005 thru 2007 have all been reassessed.
2005 was changed to Emigrant
2006 was changed to NON-Resident
2007 was changed to NON-Resident.
This has evoked penalties and interest on these tax years. Along with repayment of all amounts of CCTB and UCCB for these years.
I believe the error occurred because of one of the three agents entered 2005 instead of 2008 by mistake.
It seems that it is not worth being proactive in notifying CRA of anything. I have filed a formal complaint to get this reversed all because for there complete incompetence.
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david ingram replies:
Way back when I had a coupe drive into Canada in a GMC Suburban pulling an Airstream trailer. They went to work for the same outfit in Abbotsford and I personally prepared their tax returns showing them as immigrants to Canada and sent the two returns in the same envelope tot he International Office in Ottawa. When the assessments arrived, the husband was treated as a resident and the wife as a non-resident.
Keith Hillier who was the head of the International Department had persoanlly asked me to send anything I considered silly to his attention. He sent back a letter saying it would be looked after. The assessments came back with the husband a non-resident and the wife a resident. It was straigtened out but it took over a year.
In another case, a wealthy family of six arrived from a south American Country as political refugees / immigants. They were the only political refugees I ever dealt with who arrived in their own executive aircraft. It was a well planned escape form the regime at the time and we had already being p[reparing non-residnet tax returns for them because they owned significant real estate holdings in Vancouver. It took us two or three years to finally get all of thepeople on the same l;evel with the tax office even though their circumstances were identical.
I understand how these can happen when the returns go in different envelopes but i have a real hard time figuring it out when they arrive together.
Back to your situation.
Being pro-active was correct, doing it by phone is an absolute no no no no!
I try and send everything to Revenue Canada or the CRA in 14 point type - big enough type that 19 our of 20 people can read it without glasses. Accentuate and highlight dates.
We just changed the dates on two seminars from Sept 20 and 21 to Jan 31 and Feb 1. I sent it as Jan 21 and February 1 and had to change it again and that was myself on my own website,.
The biggest problem is that it seems that half of the people at the CRA have English as second language. I have so much admiration for ANYONE who speaks two languages that I* can assure you that this is not a racial or bigoted comment. However, when someone does speak multiple languages, it is my experience that there is extra room for error.
In the 80's I had a most able and admirable assistant, Satu Rand, who was from Finland and spoke SEVEN Languages. She was brilliant and wonderful but finding things she had filed was an adventure. Her mind worked in marvelous ways that would file things in the language she was thinking of no matter what the subject was. I also had a Finnish sister in law.. So if I couldn't find something that Satu had filed, I would phone S-I-L Sari and ask her what the word was in Finnish and usually find it.
I do not know what you mean by a formal complaint. In this case, you should be filing a T400 (Notice of Objection) for each of the years. That process stops collection procedures..
good luck
And I also can NOT tell if you are a returning American or someone who has moved to the US.
I gather that yo are a returning American.
If that is the case, you will just be continuing to file your 1040 and 1116. I am sure you are aware that as an American in Canada WITH children, it is usually better to file your 1040 without filing a 2555 because of the US child tax benefit.
If you are going to the US on a H1 r a TN or an L1 vise, you are likely a dual status filer for the US and can NOT file a 1040 Joint return.
In either case, make sure you file your Canadian 1161 and 1243 and 1244 forms if necessary with your departing Canada return.
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These older questions will likely help.
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QUESTION:
I started working in the states last April for about 8 months with a TN visa. I was wondering if I have to pay taxes on income earned in the states to Canada as well?
------------------------------------------david ingram replies:
You should file a departing Canada Income tax return with form T1161 and maybe a 1243 and 1244 if you have left any assets behind.
These older questions will help a bit
xxxxx wrote:
hello
i am a single Canadian working full-time in Texas for a us employer
i have been in the us since Jan 2, 2007 on a tn visa.
i currently have a W2 and also have slips for rsp contributions
from Canada for 2007.
what would be the cost for filing my tax returns to both countries?
also do you recommend contributing to ira roth's instead of rsp's
when i am working in the us?
thank you
xxxxx
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david ingram replies:
As described, you have no tax to pay to Canada and should not have bought an RRSP for 2007.
Basically, you should be filing a departing Canada return and look at T1161 to see if it is necessary to file it - Usually, you would file it is you own a summer cottage, home, non-RRSP mutual fund or brokerage account or are leaving a share of a family business or farm behind.
For the US, you would file a US1040. there is no tax return in Texas, Nevada, Alaska, Florida for you to file.
If your intention is to come back to Canada, you should likely NOT buy a ROTH. If you want a tax deduction buy a conventional IRA or participate larger in a company 401(K)
We charge $900 to $3000 for US Canada tax returns
There is a more detailed list further down below.
I am Canadian citizen and have been working in USA on TN-Visa since 2004. I have a valid Canadian driver license, no medical card, working bank account and has no property. All my family is staying with me in USA.
1) Am I suppose to file a Canadian taxes every year.
2) If I do, what would be the roughly tax break up like 20% paying in Canada and 80% in USA.
3) What would be your fee to file Canadian and USA taxes.
Thanks & regards.
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david ingram replies:
You should have filed a departing Canada return in 2004. there is no need to file a 2005, 2006, or 2007 return as you have described your situation.
If, on the other hand, the Canadian government asks you for a return for any of those years, you, as a Canadian citizen, are required to file. Report all of your US income on the T1 and then deduct it all on line 256 of the return under Article IV of the US - Canada Income Tax Convention (treaty).
This older question and answer may help
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I moved to Nevada for a job July 2006, and still work there now. Do I do my
taxes in canada and us seperately? My earnings for 2006 in Canada were very
low.
_______________________________________________
david ingram replies:
You have more than one choice.
1. a) You file a departing Canada tax return including form T1161 and 1243 and 1244 if you left more than $25,000 worth of assets behind.
b)
You file a 1040NR Dual Status Statement for the US and then a 1040 Dual Status Return to report the US income only. The statement is there to separate out any US income you may have received BEFORE you actually went to the US. You can NOT claim the standard deduction on a Dual Status Return You can only use itemized deductions on a Dual Status Return.
2. a) You file Canada as in 1a) above.
b) You file a 1040 tax return reporting your world income for the year including the Canadian income. Then you file US form 1116 to claim a foreign tax credit for the tax, CPP and EI you paid to Canada. This allows you to claim the standard deduction on the US return.
Good luck. Remember that you can always send the returns here by fax, courier snail mail or pdf email.
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QUESTION:
Dear experts:
I am currently holding a TN visa working for a US employer. I have my family ties to Canada but I reside in the States for more than 183 days/year. Should I file as US resident or Canadan resident for the Tax purpose? In each case, what kind of tax forms or schedules I have to look at?
Thanks
_____________________________________________________________________________
david ingram replies
If you are applying for an H1B visa and intend to get a green card and your family is not moving unitl the resident alien cards come through, you should be filing as a US resident and not paying tax in Canada. If you have a house, it should be put in your wife's name only. You would file a US joint return with your wife and claim your children as dependents.
If you are not intending to stay in the US and are still spending a lot of time in Canada, you would file as a Canadian resident and claim a foreign tax credit for the taxes, FICA and Medicare taxes you pay to the US after filing your US 1040.
There is an in between position where you might be a factual resident of Canada where you report your US income to Canada but deduct it then on line 256 under Article IV of the US Canada Income Tax Convention. In this case you would be a tax resident of the US and file a joint US return with your wife.
You need to sit down in person or by phone with someone like myself who really understands it.
Note that you can always send your departure / arrival returns here. The following is a suggested price list.
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SUGGESTED PRICE GUIDELINES - Aug 5, 2008
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This is not intended to be definitive but in general I am quoting $900 to $3,000 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.
$1,200 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
$3,000 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 $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
A Business for $400 - Rental and business likely $550 to $700
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 $900 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 for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable. In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years. We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.
Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files. As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files. It can take us a valuable hour or more to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance.
This is a guideline not etched in stone. If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
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