Canada tax info

[Flames9_RN 358]

Everyone keeps asking about taxes. So will jot down on what I know, and a few links from others from the old forum. I suck at explaining things so will try to keep it simple.

CANADA taxes:

NONRESIDENT info:

http://www.cra-arc.gc.ca/formspubs/t1gener...esidents-e.html

Info from cerierose:

Just a note...on that page it says if you aren't a resident, use the non-resident forms. However, when I called the International Tax office yesterday to ask for clarification, they told me that because I moved last year(2005), I would still use the forms from my former province for that year.

When in doubt best to call Canadian International Tax office, # is 1-800-267-5177

When filing out your Canada taxes, from my understanding your American spouse(not living in canada) is NOT entitled to any tax credits. You can list her on the tax return and file as married, but your not entitled to any credits, I may be wrong, just what the Revenue Canada person told me on the phone. If you do list him/her on the form, in the SIN box, write down something like NON Resident, never resided in Canada, USA citizen. And for him/hr income amount, convert her USA$$ to CDN $$. You do not really have to do that, but if your using a computer software program to do the taxes, as long as you put in an amount over the basic personal exemption limit (not sure what it is, somewhere around $7000??) it should not award her any credits. And of course on the 1st page it asks on what date you CEASED to be a CDn resident.

My CDn taxes have always been straight forward, normally just work and RRSP's (paid back the RRSP's I took out to buy House)

Determining residency:

http://www.cra-arc.gc.ca/E/pbg/tf/nr73/README.html

I never filled it out. I just stated on my income tax papers the date I ceased to be a resident and all was well. On the phone I talked to Revenue Canada and they were find with that. Not sure if they are the governing body though. Others have filled it out, and stated it did not take that long.

Great USA/CAnada tax info forum:

http://forums.serbinski.com/index.php?sid=...69e26b292b2d1cc

Ensure you do a SEARCH prior to asking question. A fellow named NELSON answers the majority of questions, and get a bit grumpy if the same question gets asked over and over. Lots of info on RRSP's (form 8891)

USA TAXES

I'm even less than an expert here, but great info on the above link. A few forms you should be aware of:

Form 8891: Declaring RRSP's to IRS:

http://www.irs.gov/pub/irs-pdf/f8891.pdf

What your doing is notifying the IRS that you have RRSP's. It won't effect your Federal return, but some States my tax you on them!! Oodles of info on abobe forum on form 8891

form 2555 and 2555-ez

http://www.irs.gov/pub/irs-pdf/f2555.pdf

http://www.irs.gov/pub/irs-pdf/f2555ez.pdf

This can if you qualify (do the presence test on form2555-ez) deduct up to $80,000 on EARNED income from Canada

A great book to read and get general info is "The Border Guide" by Robert Keats. I belive they are up to the 7th edition now. Can get it cheap on ebay.com, half.com or amazon.com Brand new its around $25 cdn

Feel free to correct my info and pass along your tax knowledge. I tried to use H&R Block last yr, but the so called Cdn tax expert at the office I went to was clueless!! Others have used H&R block with success. Cheers, Scott

[daisy16 0]

Thanks flames!

A note about H&R block. They have a relatively cheap insurance, $30-50 I believe, that if you purchase and they make mistakes on your US income tax they will cover the costs. It may be worth checking out for the first year here.

[Flames9_RN 358]

With the H&R block, jackson Hewitt type of income tax prep services it al ldepends on the people. Some offices have better trained people than others. But the H&R block office I went to was useless. He did not know about Form 2555 or 8891!! Luckily I had completed some research prior. The jackson Hewitt fellow wasn't fully aware of everything, but at least he listened to me and looked into the info!! Filling out of taxes isn't really that difficult. Best of luck

[bobo 2]

For EI benefits that I've got in 2005 I believe I will receive some sort of paper from government stating the amount and the withhold taxes. Does anybody know when I'll receive it and its name (I guess T-something)?

Thank you!

[Flames9_RN 358]

I know with I received my T4 slips with the military usually by the end of FEB, so I'm assuming should be around the same time for EI.

[zyggy 9]

I know with I received my T4 slips with the military usually by the end of FEB, so I'm assuming should be around the same time for EI.

Actually, since they took out non-resident taxes out of your EI, you'll receive nothing from the Canadian Government....

[Flames9_RN 358]

Interesting, I did not know that!! I was still being paid by the Cdn Armed forces til the 9th jan 2005, so wil still have to fil out taxes for 2005. Guess I will have to phone The international Revenue Canada and see if I have to report any of the EI--just to make sure!! Im hoping my t4 slip from the military finds my way here, lol Do you have to report the EI to the IRS? I suppose not if EI does not give one any paperwork!!

Edited February 6, 2006 by flames9

[ceriserose 1]

**Reposting from old forums, might have application for some here.**

In addition to this, one piece of advice I was given at the International Tax office is that I may want to file part of my year differently...under a "partial year 217." Here's what was explained to me:

When they calculate your taxes, they pro-rate your tax credits to the amount of time you were actually in the country, unless 90% or more of your income was Canadian. So for example, the individual tax credit this year is $8,648 or something like that...but they would automatically reduce that to reflect the amount of time actually spent residing in Canada.

So in my circumstance, I worked in Canada, left Canada and didn't work in the US in 2005...meaning 100% of my income for 2005 was Canadian-derived. They told me to include a letter stating this or my tax credit amounts would be pro-rated to less than full!

Also, because I withdrew an RRSP after I moved to the US, I was subject to the standard 25% withholding tax for non-residents. However, as it was explained to me, because that is Canadian-derived income, it can count toward the 90% needed to not have the tax credits pro-rated, and it also means that they will adjust for "normal" taxation, probably resulting in money back from that initial 25%. To do this, however, in the letter I send about the 90% Canadian income, they told me to ask them to consider that RRSP income under the rules of "partial year 217."

So, I know that might be confusing...if anyone has done any RRSP withdrawals after leaving Canada, might be worth your while to call the tax # in case they can offer you more options/information around how to file to get the maximum benefit...I didn't know that you could file partial years as something else.

The one thing I'm uncertain about is if I file under the partial year 217 whether or not under the Canadian/US tax treaty that money is also required to be reported to the IRS in the US taxes...as I'm not sure how black and white that situation is. (I'm sure I'll be phoning the Cdn tax number again, so I guess that's one more question for the list. LOL)

[neiks 19]

Has anyone used one of those international tax services such as the Serbinski Accounting firm afiliated with the forum mentioned by Scott or Keats, Connelly & Associates (the Border Guide)? The seem like they could be pretty spending to get to do your taxes and am wonder if there is any huge benefit to their services?

I am worried about using a regular tax preparer like H&R and getting someone that really doesn't know the US/Canada tax situation and I won't get full benefit of the tax treaty and tips.

[Flames9_RN 358]

No, but I was tempted to email Nelson on that board and ask what the going rate was? I belive it cost me $350 last yr at jackson hewitt. Going to try and do it myself this yr.

[neiks 19]

I saw their rate schedule - something like $250 each for completion of your Canada and US tax return. On the Serbinski site you can pay a deposit of $250 for a consultation and then if you decide to use their service you will be credited the $250 towards your balance due.

I'm tempted?

[Flames9_RN 358]

I suppose one could phone them and they could give an estimate.

[neiks 19]

Sorry this is what's on their site:

Canadian Individual Returns:

Federal T1 return;

Filing for one province or territory.

Return may include investment income and capital transactions, on a full or part year residence basis.

Average fees: $CDN 350 to 650. (per couple)

United States Individual Returns:

Federal 1040 or 1040 NR return

One state return

Form 90.22.1

Election under Rev Proc 89-45

Dual status optimization

Return may include investment income and capital transactions, on a full year or part year residence basis.

Average fees: $US 300 - 750. (per coup

and

Our program works like this:

You provide us with a deposit of $US 125. or $CDN 205 (including GST)., depending on the primary nature of advice sought.

We will provide an initial review of your situation, and will render advice on filing status, residency, tax jurisdiction or other tax planning or compliance issues for either Canada, the United States, or both. In providing this review, we will examine tax returns or other documents you provide, and will provide you with guidance, based on the information you supply, as to the most beneficial or required tax strategy.

If you use our firm for income tax preparation or consultation services within twelve months of the initial consultation, WE WILL CREDIT THE FULL AMOUNT OF YOUR DEPOSIT TO YOUR ACCOUNT for services rendered by our firms.

[zyggy 9]

Interesting, I did not know that!! I was still being paid by the Cdn Armed forces til the 9th jan 2005, so wil still have to fil out taxes for 2005. Guess I will have to phone The international Revenue Canada and see if I have to report any of the EI--just to make sure!! Im hoping my t4 slip from the military finds my way here, lol Do you have to report the EI to the IRS? I suppose not if EI does not give one any paperwork!!

If they took non-resident taxes out of your EI, you do not have to report it on your T1.

And yes, you're supposed to report it to the IRS under other income and then take a foreign tax credit on the 25%. How will they know? Shrug...

[nina1 0]

I called the canadian tax ppl last year, and they told me to file a general tax return.. I was also told that even though i am in the US, i am still considered a CANADIAN resident , ONLY UP UNTIL I RECIEVE A LETTER FROM US IMMIGRATION SAYING THAT I AM NOW A US RESIDENT..

One other representative did tell me though that i would have to prorate the credits..

Everyone gave me different answers so i picked whatever answer suited me. I did though, upon advice of one rep, add a letter stating when i was married, and that my husband is not a canadian citizen, that he has not earned any CAN income, and THIS INCOME TAX RETURN IS DONE WITHIN THE BEST OF MY KNOWLEDGE..

This brings me to a question.. When you apply for a new canadian passport, are you supposed to write USA under country of residence??? Im still adjusting status..