The IRS/CRA Income Tax Thread

[zyggy 9]

Ziggy:

One quick question.

I have become a non-resident of Canada in 07 and I have received two NZ-4 slips (1 for bank interest and 1 for dividend).

I tried to file my tax using Taxact but I couldn't find the appropriate field to enter the two slips. There is an option for foreign interest but when I entered Canada it didn't prompt me to the next section. I am wondering is this a software issue or did I not fill in the right section?

Thanks in advance!

If the 25% non-resident tax was taken out, you do not need to file anything to CRA.

Ziggy, thanks for the quick reply. I guess I didn't ask my question clearly. I was wondering which form will I have to use to report my Canadian income to IRS. The software I used (Taxact) didn't have a place for me to enter these income. Does other software like turbotax have a form for these income or do I have to file it manually with paper form?

I am ok on the Canadian side since CRA no longer withhold tax from interest income(Bill C38) and they have already withheld 15% tax from my dividend income.

Thanks again!

You would enter it like any other dividend or interest. Nothing special if its foreign...

[EED 0]

Hi Zyggy.

I have a 2 part question:

I received $200 income from Universal Child Care Benefit in 2008. This is the only income we have in Canada. Do we have an obligation to file Canadian taxes or can we just include this with our US income?

In regards to form 8891, I am having difficulty figuring out the value of my RRSP at Dec 31. Can I use the value as at the last statement date, which is Oct 2008? Also, are LIRA’s reported the same way as RRSP’s?

I look forward to your comments.

Thanks

[zyggy 9]

Hi Zyggy.

I have a 2 part question:

I received $200 income from Universal Child Care Benefit in 2008. This is the only income we have in Canada. Do we have an obligation to file Canadian taxes or can we just include this with our US income?

In regards to form 8891, I am having difficulty figuring out the value of my RRSP at Dec 31. Can I use the value as at the last statement date, which is Oct 2008? Also, are LIRA's reported the same way as RRSP's?

I look forward to your comments.

Thanks

You shoudl not have received the benefit if you filed a Leaving Canada return for 2007. If you entered the US in 2008, you must file a leaving Canada return, even if you have 0 income. In your case, be prepared to pay all or a portion of that benefit back if you entered the uS in 2008.

The value of all retirement plans are reported on the 8891 including a LIRA. You should get a year end statement. If not, call your plan and ask for the value on Dec 31.

[EED 0]

Zyggy.

RE 8891 for the LIRA, if it is managed by the same plan provider as my RRSP, do I report the total combined value of the account in one form or do I report it separately in a new 8891?

I would also like to hear your thoughts on completing NR73, should we just let our final tax with a departure date speak for itself or should we file a NR73?

I appreciate the time and effort you put in responding to this thread. Thank you!

[zyggy 9]

Zyggy.

RE 8891 for the LIRA, if it is managed by the same plan provider as my RRSP, do I report the total combined value of the account in one form or do I report it separately in a new 8891?

I would also like to hear your thoughts on completing NR73, should we just let our final tax with a departure date speak for itself or should we file a NR73?

I appreciate the time and effort you put in responding to this thread. Thank you!

Same form is fine.

Do not file a NR-73 unless CRA specifically asks you to do so. THe Leaving Canada return speaks for itself.

[AaronInVirginia 0]

Hi Zyggy,

Thank you for all your help for everyone, I hope you can shed some light on my answers as well.

I'm a U.S. Citizen, my wife and her daughter are Canadian citizens. We are in the process of getting through the paperwork so they can live here legally. I'm doing MFJ and using turbotax. I've also got the W-7 ITIN forms and I know that we can't efile. The only place there seems to be a place for us to declare her income is on the 2555 foreign income exclusion form. I've done a little bit of research, and it looks like she meets the bona fide resident test because she's lived their her whole life, she worked for a Canadian entity that has no U.S. presence (thus tax home is there). But, since we're going to file MFJ and have her viewed as a U.S. resident for the full year (with a declaration that that's what we're doing).

So I guess, my first question is, does that negate the whole bona fide resident thing?

Secondly, if I can't use the 2555 form, then (forgive me if this is a dumb question) where/how DO I declare her income?

Thirdly, she has earned interest on Canadian bank accounts. I have to declare this to the IRS also, correct? what form do I do that with?

Thank you in advance for your help!

[AaronInVirginia 0]

Hi Zyggy,

Thank you for all your help for everyone, I hope you can shed some light on my questions as well.

I'm a U.S. Citizen, my wife and her daughter are Canadian citizens. We are in the process of getting through the paperwork so they can live here with me. I'm doing MFJ and using turbotax. I've also got the W-7 ITIN forms and I know that we can't efile. The only place there seems to be a place for us to declare her income is on the 2555 foreign income exclusion form. I've done a little bit of research, and it looks like she meets the bona fide resident test because she's lived their her whole life, she worked for a Canadian entity that has no U.S. presence (thus tax home is there). But, since we're going to file MFJ and have her viewed as a U.S. resident for the full year (with a declaration that that's what we're doing).

So I guess, my first question is, does that negate the whole bona fide resident thing?

Secondly, if I can't use the 2555 form, then (forgive me if this is a dumb question) where/how DO I declare her income?

Thirdly, she has earned interest on Canadian bank accounts. I have to declare this to the IRS also, correct? what form do I do that with?

Thank you in advance for your help!

I didn't see a way to delete the post, so I figured I'd just fix it this way... please read/use this one... and if you know how to delete the old one, could you? Thanks.

[zyggy 9]

Hi Zyggy,

Thank you for all your help for everyone, I hope you can shed some light on my answers as well.

I'm a U.S. Citizen, my wife and her daughter are Canadian citizens. We are in the process of getting through the paperwork so they can live here legally. I'm doing MFJ and using turbotax. I've also got the W-7 ITIN forms and I know that we can't efile. The only place there seems to be a place for us to declare her income is on the 2555 foreign income exclusion form. I've done a little bit of research, and it looks like she meets the bona fide resident test because she's lived their her whole life, she worked for a Canadian entity that has no U.S. presence (thus tax home is there). But, since we're going to file MFJ and have her viewed as a U.S. resident for the full year (with a declaration that that's what we're doing).

So I guess, my first question is, does that negate the whole bona fide resident thing?

Secondly, if I can't use the 2555 form, then (forgive me if this is a dumb question) where/how DO I declare her income?

Thirdly, she has earned interest on Canadian bank accounts. I have to declare this to the IRS also, correct? what form do I do that with?

Thank you in advance for your help!

YOu can make the option to treat her as a resident alien for tax purposes. You do this in writing and include a statement with yuor return. Even though you can opt to treat her as a resident alien for tax purposes (meaning you must report her worldwide income to the IRS), you can exclude her foreign income using the 2555 she is a bona fide tax resident of Canada and not the US.

It's no different as if you as a USC lived in Canada.. you are requried to report your worldwide income to the IRS, but you can exclude it since you were a bonafide tax resident of Canada.

You would include interest income with the wage income that you exclude on the 2555. It's all foreign income.

[LindaB 0]

I finally received my T4 slip in the mail so I was just playing around on Quicktax. I entered all my information as if I was still a resident of Canada and I got a nice refund but when I clicked on a non-resident of Canada, I then owed a few thousand!!!! Is that right....I am sure hoping I did something wrong!

[sly_wolf 199]

I finally received my T4 slip in the mail so I was just playing around on Quicktax. I entered all my information as if I was still a resident of Canada and I got a nice refund but when I clicked on a non-resident of Canada, I then owed a few thousand!!!! Is that right....I am sure hoping I did something wrong!

Sounds a bit fishy. You should create 2 different returns from scratch and then compare.

Sly

[jhunjhun 7]

I have few questions for Canadian tax return. I tried to do my Canadian tax return using Ufile and seemed very straightforward, however the problem was, it asked my residency on Dec 31 2008. When I put Saskatchewan it will give me a form " Income Tax and Benefit Return" however, when I chose non-resident ti gave me " Non-resident and deemed resident form" and my refund has changed quite a bit from $1093 ( deemed or non-resident) to $1169 ( resident of Saskatchewan). I know that because I'm a resident of Saskatchewan for yr 2008, I should be using my province tax form. It would be nice if I were a non-resident of Saskatchewan and file my tax return using efile. It's hard to understand by using tax software that doesn't support everything that I was a resident of Saskatchewan for part of the year and on Dec 31 2008 I was not. It only gives me 2 type of tax forms if using ufile ( for a resident and deemed or non-resident ).

Do you think this is good comaprison when I'm working on this in paper return? I already did the return and my refund in paper was quite close to each other a little off of $7. When doing my tax return using ufile -it was free may be my income was not much.

[jhunjhun 7]

I finally received my T4 slip in the mail so I was just playing around on Quicktax. I entered all my information as if I was still a resident of Canada and I got a nice refund but when I clicked on a non-resident of Canada, I then owed a few thousand!!!! Is that right....I am sure hoping I did something wrong!

Sounds a bit fishy. You should create 2 different returns from scratch and then compare.

Sly

Try to use ufile not quicktax to campare your return

[zyggy 9]

I have few questions for Canadian tax return. I tried to do my Canadian tax return using Ufile and seemed very straightforward, however the problem was, it asked my residency on Dec 31 2008. When I put Saskatchewan it will give me a form " Income Tax and Benefit Return" however, when I chose non-resident ti gave me " Non-resident and deemed resident form" and my refund has changed quite a bit from $1093 ( deemed or non-resident) to $1169 ( resident of Saskatchewan). I know that because I'm a resident of Saskatchewan for yr 2008, I should be using my province tax form. It would be nice if I were a non-resident of Saskatchewan and file my tax return using efile. It's hard to understand by using tax software that doesn't support everything that I was a resident of Saskatchewan for part of the year and on Dec 31 2008 I was not. It only gives me 2 type of tax forms if using ufile ( for a resident and deemed or non-resident ).

Do you think this is good comaprison when I'm working on this in paper return? I already did the return and my refund in paper was quite close to each other a little off of $7. When doing my tax return using ufile -it was free may be my income was not much.

The tax programs break down in our situation. You have to use the program as a guide and then adjust the numbers by hand. You use the resident tax forms, but you'll have to manually adjust the deduction numbers and put in the date you left Canada.

[jhunjhun 7]

Hello zyggy, I would like to know if it's alright to use the basic personal amount in federal tax schedule 1 without prorating it based on the number of days I spent in Canada before until I left. Someone told me before that I can use the basic personal( 9600) instead of doing the prorate. What do you think? Thanks!

[zyggy 9]

Hello zyggy, I would like to know if it's alright to use the basic personal amount in federal tax schedule 1 without prorating it based on the number of days I spent in Canada before until I left. Someone told me before that I can use the basic personal( 9600) instead of doing the prorate. What do you think? Thanks!

You have to prorate it...