Filing 2006 Canadian Income Taxes

[zyggy 9]

H&R BLock is for the everyman... if you have normal taxes they're usually fine.. if you have really wacked out cases, it's important to see the right person there... and there are a lot of bad tax preparers there... but a lot of really good ones as well... It's a part time gig for me to pick up a little quick extra cash... It's nice.. I work when I want to work...

I cashed out a pile of RRSP last yr, now trying to figure out how to include that in my USA taxes. I have been filing form 8891. And Canada did deduct the 25% tax. I hate taxes

You fill out Form 8891.. but you put the amount that you received on Form 9a and the taxable amount on Line 9b. It would only a non-taxable portion if you put any after-tax money in the RRSP... (which is unlikely)... 98% of the time the taxable distribtuins are the same as the total distributions... It states on the form that those numbers are to be placed on lines 16a and 16b respectively... Any foreign tax on the amout should be reported on Form 1116 and taken as a foreign tax credit...

I would also file a Section 217 return to CRA and see if you can't get some of the 25% back... or the tax treaty may allow you to get all of it back... I would call the International Tax Office on this one...

Where it's really going to screw you is your State taxes....

Edited March 16, 2007 by zyggy

[Flames9_RN 358]

H&R BLock is for the everyman... if you have normal taxes they're usually fine.. if you have really wacked out cases, it's important to see the right person there... and there are a lot of bad tax preparers there... but a lot of really good ones as well... It's a part time gig for me to pick up a little quick extra cash... It's nice.. I work when I want to work...

I cashed out a pile of RRSP last yr, now trying to figure out how to include that in my USA taxes. I have been filing form 8891. And Canada did deduct the 25% tax. I hate taxes

You fill out Form 8891.. but you put the amount that you received on Form 9a and the taxable amount on Line 9b. It would only a non-taxable portion if you put any after-tax money in the RRSP... (which is unlikely)... 98% of the time the taxable distribtuins are the same as the total distributions... It states on the form that those numbers are to be placed on lines 16a and 16b respectively... Any foreign tax on the amout should be reported on Form 1116 and taken as a foreign tax credit...

I would also file a Section 217 return to CRA and see if you can't get some of the 25% back... or the tax treaty may allow you to get all of it back... I would call the International Tax Office on this one...

Where it's really going to screw you is your State taxes....

I called CDn International tax office, and because of the amount, 217 probaly woul dnot work in my favor. he said work it out, and if I have $$ comign back file it, if not, don't!! I used Section 217 to get some of my EI $$ tax back

Have been using a guy from jackson Hewitt the past few yrs to fiel my USA taxes. He has done a fairly decent job. The one thing I liked about him is that he listens to me. I did a bit of research, so I knew some of the forms (8891, 2555). I told him what I thought was correct (very politely) and he researched it, and we went from there. i was hoping this yr not to use him, and just use turbo tax!! If it wasn't for these damn RRSP's our filing would be pretty basic. I just recently cashed out th elast of my RRSP's so I can be done with the RRSP hassles each yr at tax time, lol I guess the 1 nice thing about going with Hewitt jackson, is that I purchased their insurance, so if IRS does come back,and state I owe more $$, Jackson Hewitt would pay it!!

1 site that I have used for tax info is http://forums.serbinski.com/index.php?sid=...9e0066bcbee3f79. A fellow named Nelson answers 99% of the questions. Again its a forum, so one can't fully go on the info.

Thanks for the info Zyggy, we all appreciate it, well except for Cutienpurgy, constantly getting PM's from her stating hpw she thinks ur passing on incorrect info!! She must drink her tims black!!

Thanks, Scott

[thermophile 0]

I'll jump into this conversation. I've tried the Serbinski forum but most of the time I can't get any messages to load, seems like their server is overloaded. Anyway, I've been doing my US taxes for years no problem. This year I'm trying to do my Canadian taxes and I keep end up owing Canada $600 which is quite a bit for a poor grad student. I'm Canadian PR and spent about 10 weeks in Canada, worked a part time job meaning that I have a T1 in the system (for less than $500, but it's still in the system). I'm a graduate TA and made $15,000 in the US, part of my benefits is tuition but that doesn't show up as income.

So, Canadian taxes...I took the standard deduction, the education deduction, and student loan intrest deduction. I did my US taxes and am getting all the withheld taxes back, is there another foreign deduction that I'm missing? My husband said that when he was working in the US in the mid 90's he would use the tax treaty and not pay taxes on the first $10,000 that he made in the US. But I can't find that anywhere-has this changed? or did my husband misunderstand and just get lucky and not get audited? I looked at the overseas employment credit but that doesn't seem to apply to me. Do I as a grad student really have to pay more taxes on foreign earnings than someone who works for one of the major oil or mineral extraction companies? foolish question I know. anyway any help would be appreciated

[zyggy 9]

Well... that would depend if you are considered a deemed resident of Canada or not... This is something I'm going to have to look into further...

1) You are going to have to include the Canadian Income that you made on your US 1040 on Line 7 and then take a foreign tax credit for the tax that you paid in Canada...

How you are taxed depends on how the US/Canada tax treaty places you as a resident for tax purposes for which country... On the deemed resident aspect.. I'll get back to you... Did you file a leaving Canada return when you left Canada to go to grad school? Is an entity in Canada paying for your graduate education... and probably more when I look into it..

[thermophile 0]

I included Canadian income on my US 1040-included my husbands income also as I have since we got married-then I exclude the Canadian income with the 2555EZ.

As far as my residency, I seem to be a resident of both the US and Canada. I live in the US 9-10 months a year but have a home and property and husband in Canada all year too. I didn't file a leaving Canada return-but I just moved back to the US mid Jan 2006 so this would be the first year I moved.

my stipend comes just from my US school. My only Canadian income came from the week and a half that I worked in Canada at the begining of Jan.

thanks for your help

[derekkj 0]

Have been using a guy from jackson Hewitt the past few yrs to fiel my USA taxes. He has done a fairly decent job. The one thing I liked about him is that he listens to me. I did a bit of research, so I knew some of the forms (8891, 2555). I told him what I thought was correct (very politely) and he researched it, and we went from there. i was hoping this yr not to use him, and just use turbo tax!! If it wasn't for these damn RRSP's our filing would be pretty basic. I just recently cashed out th elast of my RRSP's so I can be done with the RRSP hassles each yr at tax time, lol I guess the 1 nice thing about going with Hewitt jackson, is that I purchased their insurance, so if IRS does come back,and state I owe more $$, Jackson Hewitt would pay it!!

Ironically enough JH just called me and wanted to know when I would be coming in, lol. Like you, last year I helped point the JH guy in the right direction, although as it turned out I coulda done it on my own and saved some $. Anyway, this year I had to tell them that our returns this year would be waaaaaay to complicated for them to handle. Derek has Canadian income, US income, and then the whole mess with working for the Embassy, so it's going to be really fun. I have been researching it now for months and still don't completely understand it all, so I didn't want to give the poor JH guy a heart attack!

Fortunately someone at the Embassy has someone they have been using for years and he is able to help us as well. I think he's a Canadian, is very familiar with the issues on both sides of the border, and can file Derek's Canadian taxes too. Our first meeting is Tuesday, so this weekend is going to be spent pulling everything together and getting organized. Oh joy. He costs a fair bit, but I have to say finding someone who knows what the hell they are doing makes the whole process at least a little easier to bear. I was almost ready to promise our firstborn to anyone who could figure it all out, lol.

[CutienPurg 0]

Thanks for the info Zyggy, we all appreciate it, well except for Cutienpurgy, constantly getting PM's from her stating hpw she thinks ur passing on incorrect info!! She must drink her tims black!!

Thanks, Scott

You LIE teller!!!!!!!!!!

.........that's it .......you're gettin it now. I wasn't going to tell you of all the EXTRA LARGE double doubles Ive been drinking recently........oh oh oh and even a few 3 cream 2 sugars........soooo .........HA!!

.......yeah ...so ......ok

[zyggy 9]

I included Canadian income on my US 1040-included my husbands income also as I have since we got married-then I exclude the Canadian income with the 2555EZ.

As far as my residency, I seem to be a resident of both the US and Canada. I live in the US 9-10 months a year but have a home and property and husband in Canada all year too. I didn't file a leaving Canada return-but I just moved back to the US mid Jan 2006 so this would be the first year I moved.

my stipend comes just from my US school. My only Canadian income came from the week and a half that I worked in Canada at the begining of Jan.

thanks for your help

Based on this information, you would be considered a deemed resident of Canada... You would fill out a T1, include your worldwide income including your US income. However, you would take a foreign tax credit in Canada on the total amount of income tax that you paid in the US as indicated on your US 1040.

Also in this case, you should not take a foreign tax credit on your US 1040 on the taxes that you paid to Canada on that Canada source income. You also include the amount of Social Security Tax that you paid in 2006 as well. I believe that any state taxes that you paid are also included, but you need to get confirmation from CRA on that. WHen you file you return, include a schedule of the taxes that you paid and give evidence of each of them. You also adjust the US amounts by the multiplier of 1.13409360. You would take the foreign tax credit for the taxes paid to the US on your T1 instead as Canadian taxes are usually higher...

Use Form T2209 to take the Foriegn Tax Credit...

Use Form T2036 to take a Foreign Tax Credit for the Provincial part of your return...

Edited March 16, 2007 by zyggy

[thermophile 0]

thanks for the info. just to clarify. would I take the foreign tax credit on the income tax that was withheld? even though I'm getting all of that back? I didn't take any foreign tax credit on our US taxes-I didn't need to because just excluding our Canadian income meant that I don't owe any taxes.

thanks again for the help

[zyggy 9]

thanks for the info. just to clarify. would I take the foreign tax credit on the income tax that was withheld? even though I'm getting all of that back? I didn't take any foreign tax credit on our US taxes-I didn't need to because just excluding our Canadian income meant that I don't owe any taxes.

thanks again for the help

For your Canadian Taxes, you have to include your worldwide income, including the income that you made in the US... you would then take a foreign tax credit on the taxes that you paid in the US.. The tax calculated on the US 1040 (line 63), the total amount of taxes taken for Social Security for the year (Line 4 W-2) and the total taxes that you paid to your state based on their return.

[thermophile 0]

that's what I was afraid of... thanks for all your help

[Dusy 0]

So, I have been reading this forum, and still am totally clueless. I have always gotten my income tax done by someone else, because , yeah that's right, income tax goes right over my head. My husband (USC) and I went to get our taxes done, and she had no clue how to do mine. She did his, but isn't sure if there are forms of mine that have to be put on his income tax. One form that she used to put on his taxes was form NR4. I also have T3 (Statement of trust income allocations and designations) and the T4E (employment insurance). Do any of the amounts on those forms go on his income tax?? I wasn't employed in the States last year. The only thing I received was employment insurance. I still have residential ties to Canada (bank account, credit card, investments), so does that make me a deemed non-resident?? Also, I wanted to know if the provincial income tax is done in the same way as usual? I'm guessing yes, but what do I know. Last thing (I think), I live right on the US/Canada border. Should I get my Canadian taxes done at H&R block in the States, or just go to Canada to get them done?? I'm seeing mixed reviews about H&R block, but I don't know where else I would go. Sorry for all the strange questions. As you can see, I really don't know anything about doing income tax returns. Hopefully, someone can understand what the heck I'm talking about and get back to me. Thank you for your patience

[zyggy 9]

So, I have been reading this forum, and still am totally clueless. I have always gotten my income tax done by someone else, because , yeah that's right, income tax goes right over my head. My husband (USC) and I went to get our taxes done, and she had no clue how to do mine. She did his, but isn't sure if there are forms of mine that have to be put on his income tax. One form that she used to put on his taxes was form NR4. I also have T3 (Statement of trust income allocations and designations) and the T4E (employment insurance). Do any of the amounts on those forms go on his income tax?? I wasn't employed in the States last year. The only thing I received was employment insurance. I still have residential ties to Canada (bank account, credit card, investments), so does that make me a deemed non-resident?? Also, I wanted to know if the provincial income tax is done in the same way as usual? I'm guessing yes, but what do I know. Last thing (I think), I live right on the US/Canada border. Should I get my Canadian taxes done at H&R block in the States, or just go to Canada to get them done?? I'm seeing mixed reviews about H&R block, but I don't know where else I would go. Sorry for all the strange questions. As you can see, I really don't know anything about doing income tax returns. Hopefully, someone can understand what the heck I'm talking about and get back to me. Thank you for your patience

1) Ok.. you have a ton of questions.. let's try to tackle them one at a time...

Just having a bank account, credit card, etc.. does not make you a deemed resident... If that were the case, a lot of us would be deemed residents... the one thing that would make you a guaranteed deemed resident is if you still had a home in Canada that you haven't rented to anyone else...

In terms of US taxes, you should be filing jointly... never, never, never, never, never file married filing separately unless absolutely necessary... so it's not his taxes.. it's YOUR (together) taxes...

2) Look up the wealth of tax information on this board... you might be able to do it yourself with a little help from a tax program... but if so, I would not go to a normal H&R Block office to do your taxes in the US (unless you were going to see me of course), but you should go to one of their Premium Offices... or better yet, find an accountant who specializes in doing cross border returns...

3) Does your spouse live (or work?) in Canada at the moment... I am guessing that is the case since he got an NR4.. you need to expand a little bit on what your circumstances are and what your status is in the US at this point in time...

[macburt 0]

Good Moringing... in answer to your question I too filed my Canadain taxes. I went to H & R Block. Cost was $80.00 CDN included taxes. What they do is the following: They have to by law show that you are married and you have a spouse. You will NOT apply for any spousual credits. This would increase your refund ... but if you do this it's a no no no - you would be defrauding the CRA. You CAN NOT say that you are separated and don't let them convice you otherwise. This will screw up your immigration procedure and if they check info about your spousce it will look like you are only trying to get into the country for a green card. I filed on March 01 and recieved refund on March 16 even with there computer shutdown this year. You will also need to provide them whit the name and address of your husband/wife that they can cross referenecwe. Your US citizen husband will do the same... however athere refunds take 6 - 8 weeks.

[Dusy 0]

So, I have been reading this forum, and still am totally clueless. I have always gotten my income tax done by someone else, because , yeah that's right, income tax goes right over my head. My husband (USC) and I went to get our taxes done, and she had no clue how to do mine. She did his, but isn't sure if there are forms of mine that have to be put on his income tax. One form that she used to put on his taxes was form NR4. I also have T3 (Statement of trust income allocations and designations) and the T4E (employment insurance). Do any of the amounts on those forms go on his income tax?? I wasn't employed in the States last year. The only thing I received was employment insurance. I still have residential ties to Canada (bank account, credit card, investments), so does that make me a deemed non-resident?? Also, I wanted to know if the provincial income tax is done in the same way as usual? I'm guessing yes, but what do I know. Last thing (I think), I live right on the US/Canada border. Should I get my Canadian taxes done at H&R block in the States, or just go to Canada to get them done?? I'm seeing mixed reviews about H&R block, but I don't know where else I would go. Sorry for all the strange questions. As you can see, I really don't know anything about doing income tax returns. Hopefully, someone can understand what the heck I'm talking about and get back to me. Thank you for your patience

1) Ok.. you have a ton of questions.. let's try to tackle them one at a time...

Just having a bank account, credit card, etc.. does not make you a deemed resident... If that were the case, a lot of us would be deemed residents... the one thing that would make you a guaranteed deemed resident is if you still had a home in Canada that you haven't rented to anyone else...

In terms of US taxes, you should be filing jointly... never, never, never, never, never file married filing separately unless absolutely necessary... so it's not his taxes.. it's YOUR (together) taxes...

2) Look up the wealth of tax information on this board... you might be able to do it yourself with a little help from a tax program... but if so, I would not go to a normal H&R Block office to do your taxes in the US (unless you were going to see me of course), but you should go to one of their Premium Offices... or better yet, find an accountant who specializes in doing cross border returns...

3) Does your spouse live (or work?) in Canada at the moment... I am guessing that is the case since he got an NR4.. you need to expand a little bit on what your circumstances are and what your status is in the US at this point in time...

Zyggy

Thanks for answering. I know I went here and there with my questions. I didn't know where to begin lol

1) My husband is the US citizen and he (in mean, we ) did file as married. The only income I received was my employment insurance from Canada. Would I have to put any part of that (EI form) on the US income tax??

2) I'm in the Ogdensburg, NY area so very limited on H&R blocks. Would year-round assistance be considered a premium office? Better yet, maybe I can just call them and ask them if they do cross border returns. I'm sure my income tax return is very uncomplicated to do, but I just want to find someone to do them where they are not done wrong. Sure, I'd go see you, but you are probably not very close

3) Since my husband is the US citizen, I'm thinking you mean me with this question. I don't work in Canada. I moved to the States in at the end of June 2006. I got the NR4 for investments I have in Canada. I received my green card Sept 2006. Oh yeah, and about that provincial income tax, I would just do those like before, right? Or is there something specific I would have to do there?

Any other information needed, let me know! Thanks again.