Hope you can help,
Regards
XXXXXX
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david ingram replies:
Move whenever you want to.
Thank you for the question which points out the problem that the general public has finding a tax consultant to deal with their cross border taxes.
From now to Xmas, most of my practice will be spent fixing returns done by other preparers around North America for Canadians or Australians or New Zealanders or Brits who have moved to the US or US people who moved to Canada from the US.
Good on you for recognizing the problems and writing.
You should start off by reading my Oct 93 Newsletter on dual citizenship. Then you should read the Oct 1995 newsletter on the US tax liabilities / duties of a US citizen (or green card holder) living in Canada (or France or Japan or Australia, etc.). These two newsletters are in the top left hand box at www.centa.com. Then you should go to the second box down on the right hand side and read the US / Canada Income Tax Section.
That will give you some 50 pages to read on your situation.
Basically, however, you will need to. (forget about exchange here please - although you do need to calculate exchange on the actual returns)
1. file a Canadian T1 return showing your date of entry into Canada and reporting your Canadian wages and a prorata share of any investment income you might have from the US.
If, for instance, you had $15,000 of earnings in the US and $12,000 worth of interest for the year from the US and came to Canada on or about August 1, and then earned $25,000 in Canada, and saved just about every cent in the Royal Bank of Canada in a zero interest checking account, you would file returns as follows.
You would file a Canadian T1 return showing your date of entry into Canada as August 1 (this prorates your personal exemption amounts on Schedule 1 by the number of days you are here divided by 365 (non leap year) and taking that percentage of the approximately $10,000 of personal exemption amounts.
Your T1 would therefore have $25,000 of wages on line 101 and $5,000 of interest on Schedule 4 and line 121 of the return. You would claim a foreign tax credit of up to $500.00 on form T2209 to get credit for the up to $500.00 of tax you will have paid to the US on the interest.
1(a) You will also have to file a Quebec tax return.
2. File a US 1040 and report the $15,000 from the US and $25,000 from Canada as wages on line 7.
The $12,000 of interest would be next and you would now calculate the tax on the total after exemptions and standard deduction.
You would calculate the tax percentage on the $15,000, the $25,000, the $7,000 of interest while you were in the US and the $5,000 of interest received while in Canada.
You would claim a general foreign tax credit on form 1116 to claim the Fed and Prov taxes and CPP and EI taxes paid to Canada as a credit against the $25,000. In addition, if it worked out that you had paid more than 10% tax to the US on your US tax return on the $5,000 earned after going to Canada, you would file a foreign tax credit form 1116 and check off "resourced by treaty" to bring the tax rate down to the 10% stated in Article XI of the US Canad Income Tax Convention.
3. Because you had saved all of your Canadian earnings and now had over $10,000 US in a foreign bank, you would answer YES to question 7 on schedule B and fill in form TDF 90-22.1. The first year you would say "no" to question 8 but NEXT year you will be saying YES and filing US form 8891 to report the RRSP (a foreign trust) that you will likely purchase.
That's it for the free stuff.
If you are still confused, I will be charging you $450 CDN for a phone consultation. If you do that, get your dad on the line at the same time.
SUGGESTED PRICE
GUIDELINES - April 8,
2008
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:
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) expert US Canada Canadian American Mexican Income Tax service help.
pert US Canada Canadian American
Mexican Income Tax service and
help.
David Ingram gives expert income
tax service & 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 $450 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. ($472.50 with GST for in person or
if you are on the telephone in Canada) expert US Canada Canadian American Mexican Income
Tax service and help.
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.
--IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.--
-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 or http://www.david-ingram.com/staticpages/index.php/GaryGauvin. If you forward this message, this disclaimer must be included." -
--IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.--
-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 or http://www.david-ingram.com/staticpages/index.php/GaryGauvin. If you forward this message, this disclaimer must be included." -
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