Canada tax info

[zyggy 9]

I sent in my Canadian tax return today!!

I did it myself and I did plenty of research and was careful, so I think it will be fine.

One bonus I didn't know about til I filled in the forms: the Ontario Health Premium is only payable if you lived in Ontario on the last day of the tax year, so that saved me several hundred $$ I wasn't expecting!! My income was also larger than it would have normally been because I never paid back the Homebuyers Plan, I just claimed the balance as income. As it turned out, this actually appears to have saved me another couple of hundred, since it would have cost me 25% non-resident withholding taxes if I'd put it back in an RRSP and then withdrawn it later. This could go either way, depending on your Canadian income (i.e. if you were in a higher bracket than I am).

Also one thing to check is whether you overpaid your CPP premiums, if you moved early in the year. Mine was overpaid by $110 or so. There is a form on the Canadian tax website (google "cra"). It's form T2204.

I didn't earn any income in the US so I was able to claim 100% of the tax credits, as though I'd lived in Canada all year.

US taxes are a mystery to me, and we are having those done by an accountant.

Maybe some of this info will help someone else.

Sorry to burst your bubble... but you're going to get a bill for the Ontario Health Premium...

They define the end of the tax year as either Dec 31 or the day that you left Canada. So you're going to have to pay it. We did the same thing and got a bill about a month later.

Edited February 28, 2006 by zyggy

[allycat 0]

It was worth a shot.

Easy come, easy go...

[Peggy 1]

Whats the bill for?

[allycat 0]

Oh, because I didn't read the rules correctly. This is the rule:

2.2 (1) Every individual shall pay a tax, called the Ontario Health Premium, for a taxation year ending after December 31, 2003 if the individual is resident in Ontario on the last day of the taxation year. 2004, c. 29, s. 2.

But the "taxation year" is defined as:

"The term end of the year means December 31, 2004, if you were a resident of Ontario on that date, the date you left Canada if you emigrated in 2004, or the date of death for a resident of Ontario who died in 2004."

This only applies in Ontario, which has an evil additional health premium since 2004, which has been very controversial. So I'll owe another $450 which I'll grudgingly pay once they send a bill. I think Zyggy is correct. If I'd moved to another province, it would be a different story (I think).

I'm still happy because my taxes were much less than I thought they would be (assuming I didn't make 5 other mistakes.... ) and I have put aside money to pay what I expected to pay, so whatever is left over is a bonus to me.

[zyggy 9]

Oh, because I didn't read the rules correctly. This is the rule:

2.2 (1) Every individual shall pay a tax, called the Ontario Health Premium, for a taxation year ending after December 31, 2003 if the individual is resident in Ontario on the last day of the taxation year. 2004, c. 29, s. 2.

But the "taxation year" is defined as:

"The term end of the year means December 31, 2004, if you were a resident of Ontario on that date, the date you left Canada if you emigrated in 2004, or the date of death for a resident of Ontario who died in 2004."

This only applies in Ontario, which has an evil additional health premium since 2004, which has been very controversial. So I'll owe another $450 which I'll grudgingly pay once they send a bill. I think Zyggy is correct. If I'd moved to another province, it would be a different story (I think).

I'm still happy because my taxes were much less than I thought they would be (assuming I didn't make 5 other mistakes.... ) and I have put aside money to pay what I expected to pay, so whatever is left over is a bonus to me.

That's correct.. if you had moved to another province, you'd be using their T1 and wouldn't have to deal with the Ontario Health Premium. However, since you emigrated Canada, you have to pay it.

[itzmi 1]

How much do you think will they ask me to pay for Ontario Health premium? I left Canada on October last year. I did not work in Canada and USA for the whole year of 2005.

[zyggy 9]

How much do you think will they ask me to pay for Ontario Health premium? I left Canada on October last year. I did not work in Canada and USA for the whole year of 2005.

If you are subject to the Ontario Health Premium, you have to pay it.. However, I don't believe that people with no income have to pay it...

Even though you didn't work in Canada in 2005, you still have to file a leaving Canada return with the International Tax Services Office.

[allycat 0]

There is no health premium if your income is under $20,000.

If you had no income in 2005 then you shouldn't owe them anything, but send in a return anyway.

[daisy16 0]

here I am finally getting started on taxes!

Big question about prorating your deductions

Do I need to prorate my deductions if my income is 100% Canadian sources? I left July 3 2005.

From what others have said, I don't need to, and by the size of my calculated deduction, I don't want to

Also, about the partial 217, besides writing it on the form and adding in my payments/taxes for EI, what else do I have to do?

btw, thanks alleycat for the form for the CPP overpayment, it saves me $40.

Edited March 14, 2006 by daisy16

[zyggy 9]

here I am finally getting started on taxes!

Big question about prorating your deductions

Do I need to prorate my deductions if my income is 100% Canadian sources? I left July 3 2005.

From what others have said, I don't need to, and by the size of my calculated deduction, I don't want to

Also, about the partial 217, besides writing it on the form and adding in my payments/taxes for EI, what else do I have to do?

btw, thanks alleycat for the form for the CPP overpayment, it saves me $40.

Afraid so... You have to prorate them to the date you you left Canada. It doesn't matter if you received from Canadian sources after that. It was your responsibility to tell youyr income source about your resident status so that they would take out non-resident taxes...

Your income from EI is not included on your T1, as non-resident taxes were taken out on it. Any income that had non-resident taxes taken out on it is not to be included on your T1. However, you must include this income on your US 1040.

Edited March 14, 2006 by zyggy

[daisy16 0]

Thanks ziggy! From something that ceriserose said, I didn't think I had to do the pro-rating.

Are you saying that I don't have to include the EI payments and tax deductions on my tax forms?

[zyggy 9]

Thanks ziggy! From something that ceriserose said, I didn't think I had to do the pro-rating.

Are you saying that I don't have to include the EI payments and tax deductions on my tax forms?

I'm not exactly sure what you mean...

Did you get EI while in the US and was the 25% non-resident tax taken from the EI payments...

Non-resident taxes and income from Canadian sources that were earned while as a non-resident are not included on a T1. The non-resident tax is a flat tax and cannot be returned to you.

However, the Canadian source income earned while you were still in Canada, the EI and and US ioncome must be reported on a 1040...

The income that you earned while you were in Canada has to be reported as income, but is excluded by filling out a form 2555EZ. The EI income that you earned in the US also has to be reported as income. However, you can get a credit of the 25% non-resident tax that Canada took on it by filing a Form 1116 and taking a foreign tax credit...

Edited March 14, 2006 by zyggy

[daisy16 0]

Do I have to report the EI on the Canadian Tax forms? It is my understanding that I don't because the government kindly took their hefty cut already.

[zyggy 9]

Do I have to report the EI on the Canadian Tax forms? It is my understanding that I don't because the government kindly took their hefty cut already.

No.. you do not have to report your EI income that had the 25% non-resident taxes taken out of it on your Canadian tax forms... It does have to be reported on your US 1040 however...

Edited March 15, 2006 by zyggy

[allycat 0]

Daisy -excerpt from the emigrant's guide from the CRA website:

"In addition, if the Canadian-source income you are reporting for the part of 2005 that you were not a resident of Canada is at least 90% of your net world income for that part of the year (or if you had no income from sources inside and outside Canada for that part of the year), you can claim the remaining federal non-refundable tax credits in full. See your tax guide for the remaining federal non-refundable tax credits.

Note

To claim full federal non-refundable tax credits,attach a note to your return stating your net world income (in Canadian dollars) for the part of 2005 that you were not a resident of Canada. Show separately the net income you received from sources inside and outside Canada for that part of the year. We cannot allow full federal non-refundable tax credits without this note."

This is what Ceriserose was talking about. Read the whole emigrants guide for further info.