Filing 2006 Canadian Income Taxes

[Allie 5]

Ziggy can you give me some info.

My scenario: I collect a work retirement pension which is administered by a Canadian Financial Institution and paid monthly into my bank account in Canada.

I entered the U.S. in June on a K1, married in July.

1. Does Lorry show on her return the pension payments made only since I've been here or does she show the retirement pension earnings paid for the whole year?

2. Do I, on my Canadian return claim the whole yr. of payments or only the part of the yr. I resided in Canada?

3. As this pension will continue to be paid in the coming yrs as earned and administered in Canada am I required to fill out a Canada Tax form each yr.

4. Will I need any type of forms other than the regular Taxation ones

I appreciate any advice and info you can give us on this as this tax yr. is very confusing to me

Thanks

Allie

The bank should be taking 25% non-resident tax directly out of the proceeds of the pension. If this is done, then you do not need to file with CRA after this year. If it is beig done, you should notify your bank of your US address. They will then only take out the non-resident tax..

For this year, you will have to file a Leaving Canada return with CRA. You have a choice... You can report the income made up to the date that you left Canada, or you can file a Section 217 return and report all of the worldwide income you made. Do it both ways and choose the method that is most to your advantage.

You are going to have to report this income to the IRS. The proceeds of your pension should be reported as other income. THe payments before you came to the US can be excluded vis form 8555.. for the proceeds after you came to the US, you will need to file for a foreign tax credit using Form 1116, but it may be more advantageuos for you to take a foreign tax credit for all the money that you made from the pension all year and not to take the exclusion now that the CAD is close to par with the USD.

After this year, you will need to continue to report your proceeds of your pension as other income and take a foreign tax credit for the non-resident tax that Canada takes.

Thank you Ziggy. This is everything I was wanting to know and makes this tax thing a bit easier

[Allie 5]

Ziggy can you give me some info.

My scenario: I collect a work retirement pension which is administered by a Canadian Financial Institution and paid monthly into my bank account in Canada.

I entered the U.S. in June on a K1, married in July.

1. Does Lorry show on her return the pension payments made only since I've been here or does she show the retirement pension earnings paid for the whole year?

2. Do I, on my Canadian return claim the whole yr. of payments or only the part of the yr. I resided in Canada?

3. As this pension will continue to be paid in the coming yrs as earned and administered in Canada am I required to fill out a Canada Tax form each yr.

4. Will I need any type of forms other than the regular Taxation ones

I appreciate any advice and info you can give us on this as this tax yr. is very confusing to me

Thanks

Allie

The bank should be taking 25% non-resident tax directly out of the proceeds of the pension. If this is done, then you do not need to file with CRA after this year. If it is beig done, you should notify your bank of your US address. They will then only take out the non-resident tax..

For this year, you will have to file a Leaving Canada return with CRA. You have a choice... You can report the income made up to the date that you left Canada, or you can file a Section 217 return and report all of the worldwide income you made. Do it both ways and choose the method that is most to your advantage.

You are going to have to report this income to the IRS. The proceeds of your pension should be reported as other income. THe payments before you came to the US can be excluded vis form 8555.. for the proceeds after you came to the US, you will need to file for a foreign tax credit using Form 1116, but it may be more advantageuos for you to take a foreign tax credit for all the money that you made from the pension all year and not to take the exclusion now that the CAD is close to par with the USD.

After this year, you will need to continue to report your proceeds of your pension as other income and take a foreign tax credit for the non-resident tax that Canada takes.

Thank you Ziggy. This is everything I was wanting to know and makes this tax thing a bit easier I forgot to add where does this 25% non resident tax they're going to continue taking in Canada each yr. after I file this yr go. Would I get a tax credit from Canada for the extra 10% they're going to be takin every yr.

[zyggy 9]

Ziggy can you give me some info.

My scenario: I collect a work retirement pension which is administered by a Canadian Financial Institution and paid monthly into my bank account in Canada.

I entered the U.S. in June on a K1, married in July.

1. Does Lorry show on her return the pension payments made only since I've been here or does she show the retirement pension earnings paid for the whole year?

2. Do I, on my Canadian return claim the whole yr. of payments or only the part of the yr. I resided in Canada?

3. As this pension will continue to be paid in the coming yrs as earned and administered in Canada am I required to fill out a Canada Tax form each yr.

4. Will I need any type of forms other than the regular Taxation ones

I appreciate any advice and info you can give us on this as this tax yr. is very confusing to me

Thanks

Allie

The bank should be taking 25% non-resident tax directly out of the proceeds of the pension. If this is done, then you do not need to file with CRA after this year. If it is beig done, you should notify your bank of your US address. They will then only take out the non-resident tax..

For this year, you will have to file a Leaving Canada return with CRA. You have a choice... You can report the income made up to the date that you left Canada, or you can file a Section 217 return and report all of the worldwide income you made. Do it both ways and choose the method that is most to your advantage.

You are going to have to report this income to the IRS. The proceeds of your pension should be reported as other income. THe payments before you came to the US can be excluded vis form 8555.. for the proceeds after you came to the US, you will need to file for a foreign tax credit using Form 1116, but it may be more advantageuos for you to take a foreign tax credit for all the money that you made from the pension all year and not to take the exclusion now that the CAD is close to par with the USD.

After this year, you will need to continue to report your proceeds of your pension as other income and take a foreign tax credit for the non-resident tax that Canada takes.

Thank you Ziggy. This is everything I was wanting to know and makes this tax thing a bit easier I forgot to add where does this 25% non resident tax they're going to continue taking in Canada each yr. after I file this yr go. Would I get a tax credit from Canada for the extra 10% they're going to be takin every yr.

Canada takes out a 25% non-resident tax... there is no return required for it.. it is a flat tax taken right off the top... However, you can optionally file a T1 under Section 217 to the International Tax Services Office to see if you can get some of that non resident tax back. You would have to report your worldwide income then.. http://www.cra-arc.gc.ca/E/pub/tg/t4145/README.html

The IRS will give you a tax credit up to the amount that it would be taxed in the US. The remainder can be carried over into future years if necessary but you do not get it back as a refund.

Edited January 31, 2008 by zyggy

[Allie 5]

Ziggy can you give me some info.

My scenario: I collect a work retirement pension which is administered by a Canadian Financial Institution and paid monthly into my bank account in Canada.

I entered the U.S. in June on a K1, married in July.

1. Does Lorry show on her return the pension payments made only since I've been here or does she show the retirement pension earnings paid for the whole year?

2. Do I, on my Canadian return claim the whole yr. of payments or only the part of the yr. I resided in Canada?

3. As this pension will continue to be paid in the coming yrs as earned and administered in Canada am I required to fill out a Canada Tax form each yr.

4. Will I need any type of forms other than the regular Taxation ones

I appreciate any advice and info you can give us on this as this tax yr. is very confusing to me

Thanks

Allie

The bank should be taking 25% non-resident tax directly out of the proceeds of the pension. If this is done, then you do not need to file with CRA after this year. If it is beig done, you should notify your bank of your US address. They will then only take out the non-resident tax..

For this year, you will have to file a Leaving Canada return with CRA. You have a choice... You can report the income made up to the date that you left Canada, or you can file a Section 217 return and report all of the worldwide income you made. Do it both ways and choose the method that is most to your advantage.

You are going to have to report this income to the IRS. The proceeds of your pension should be reported as other income. THe payments before you came to the US can be excluded vis form 8555.. for the proceeds after you came to the US, you will need to file for a foreign tax credit using Form 1116, but it may be more advantageuos for you to take a foreign tax credit for all the money that you made from the pension all year and not to take the exclusion now that the CAD is close to par with the USD.

After this year, you will need to continue to report your proceeds of your pension as other income and take a foreign tax credit for the non-resident tax that Canada takes.

Thank you Ziggy. This is everything I was wanting to know and makes this tax thing a bit easier I forgot to add where does this 25% non resident tax they're going to continue taking in Canada each yr. after I file this yr go. Would I get a tax credit from Canada for the extra 10% they're going to be takin every yr.

Canada takes out a 25% non-resident tax... there is no return required for it.. it is a flat tax taken right off the top... However, you can optionally file a T1 under Section 217 to the International Tax Services Office to see if you can get some of that non resident tax back. You would have to report your worldwide income then.. http://www.cra-arc.gc.ca/E/pub/tg/t4145/README.html

The IRS will give you a tax credit up to the amount that it would be taxed in the US. The remainder can be carried over into future years if necessary but you do not get it back as a refund.

Thank you Ziggy for your answers to my questions. This all explains my tax situation very well and is very, very helpful

[zyggy 9]

Ziggy can you give me some info.

My scenario: I collect a work retirement pension which is administered by a Canadian Financial Institution and paid monthly into my bank account in Canada.

I entered the U.S. in June on a K1, married in July.

1. Does Lorry show on her return the pension payments made only since I've been here or does she show the retirement pension earnings paid for the whole year?

2. Do I, on my Canadian return claim the whole yr. of payments or only the part of the yr. I resided in Canada?

3. As this pension will continue to be paid in the coming yrs as earned and administered in Canada am I required to fill out a Canada Tax form each yr.

4. Will I need any type of forms other than the regular Taxation ones

I appreciate any advice and info you can give us on this as this tax yr. is very confusing to me

Thanks

Allie

The bank should be taking 25% non-resident tax directly out of the proceeds of the pension. If this is done, then you do not need to file with CRA after this year. If it is beig done, you should notify your bank of your US address. They will then only take out the non-resident tax..

For this year, you will have to file a Leaving Canada return with CRA. You have a choice... You can report the income made up to the date that you left Canada, or you can file a Section 217 return and report all of the worldwide income you made. Do it both ways and choose the method that is most to your advantage.

You are going to have to report this income to the IRS. The proceeds of your pension should be reported as other income. THe payments before you came to the US can be excluded vis form 8555.. for the proceeds after you came to the US, you will need to file for a foreign tax credit using Form 1116, but it may be more advantageuos for you to take a foreign tax credit for all the money that you made from the pension all year and not to take the exclusion now that the CAD is close to par with the USD.

After this year, you will need to continue to report your proceeds of your pension as other income and take a foreign tax credit for the non-resident tax that Canada takes.

Thank you Ziggy. This is everything I was wanting to know and makes this tax thing a bit easier I forgot to add where does this 25% non resident tax they're going to continue taking in Canada each yr. after I file this yr go. Would I get a tax credit from Canada for the extra 10% they're going to be takin every yr.

Canada takes out a 25% non-resident tax... there is no return required for it.. it is a flat tax taken right off the top... However, you can optionally file a T1 under Section 217 to the International Tax Services Office to see if you can get some of that non resident tax back. You would have to report your worldwide income then.. http://www.cra-arc.gc.ca/E/pub/tg/t4145/README.html

The IRS will give you a tax credit up to the amount that it would be taxed in the US. The remainder can be carried over into future years if necessary but you do not get it back as a refund.

Thank you Ziggy for your answers to my questions. This all explains my tax situation very well and is very, very helpful

You're very welcome.. glad to be of service

[G&A 1]

Zyggy, Wife is Canadian and has lived and worked in Canada all of 2007. No GC. She got her K3 visa last week and is moving to the US shortly.

For the Federal taxes, it looks MFJ is the way to go for me but with FTC (1116) instead of exclusion (2555). Based on your feedback, we will Canadian taxes first and then file US taxes to make sure the actual Canadian tax figure used in the FTC calcs. (anyways, it looks like i will have some FTC carryover for next year and she worked in Canada 1 month in 2008, we will going thru again next year). Since the taxes she owe for 2007 would not be equal to the taxes withheld in cash during the 2007 period, i would have guessed that you would have to use the accrue method as it reflect the actuals taxes accrued thoroughout the year.

regarding 3) above, why can't i take FTC for the EI taxes paid by her in addition to the CPP taxes paid?

Regarding CA taxes, i made some progress. I spoke with the FTB (tax board) and they told me to file 540NR and exclude all her income (it is like doing the 2555 for the fed taxes).

Since she does not have a social, my understanding is that i need to file a W-7 app. for ITIN with the 1040. Not sure what to do for the state 540NR. need to call them again.

thanks a million!

IRS does not consider what you pay into EI as a tax. They consider it a premium for unemployment insurance. A big difference in their eyes.

Yes, you will need to file a W-7 for her. I don't know what California would require, but they sometimes allow you to put 'pending' with a copy of the W-7. But check with them to see how they want to treat it.

Accrual accounting method is used for businesses. For example, if you used accrual method, you would have to calculate the amount of tax she made each day she worked, instead of when it was actually paid. For individuals, we do our account based on the date that we were paid, not on the time that was worked. So for the end of they year, I may have worked the time in 2007 but was paid for that work in 2008. FOr the cash accounting system (which is what individuals use) that income is counted as being earned in 2008, since that is when you were paid for that work. Individuals use cash method of accounting, don't confuse yourself too much.

Thanks for your help Zyggy.

[Udella&Wiz 325]

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!!

Hey Flames, did you end up trying TurboTax? I have been using it for years and it has always worked great but wasn't sure it would handle the whole Canadian spouse thing. Married but her income was in another country, yada, yada, yada...

Wiz

[Flames9_RN 358]

I tried using it , bu tin my case last yr it didnt work for me, as I had taken out RRSP's and had to include that, and couldnt figure out how to do it on turbo tax!

[trailmix 77]

I tried using it , bu tin my case last yr it didnt work for me, as I had taken out RRSP's and had to include that, and couldnt figure out how to do it on turbo tax!

So did you try using the Form 8891 in turbo and it just didn't work or you couldn't decide how to access that form in turbo?

I see the 'deluxe' package of turbo includes it:

http://turbotax.intuit.com/personal-taxes/...?TB_iframe=true

[Flames9_RN 358]

i didnt try that hard to be honest!! My inlaws volunteered their accountant to do it,lol They probably wish they had not, as thier accountant had no clue, thus had to do a lot of research! They never told me the exact price they were charged, but I believe it was around $2000 ouch!!

[trailmix 77]

i didnt try that hard to be honest!! My inlaws volunteered their accountant to do it,lol They probably wish they had not, as thier accountant had no clue, thus had to do a lot of research! They never told me the exact price they were charged, but I believe it was around $2000 ouch!!

Egads!!

[chryl&jhn 0]

you can file as either single, depending *when* you got married, or as "separated"

I filed my last return in Canada as "separated" and did not need to declare my husband's US income whatsoever. The lady who did mine at H&R Block was very knowledgable about what to do with it. Unlike the people I've met here at H&R Block in the US who really had no clue what they were supposed to do with our taxes here.

I know what you mean. I am trying to get ours done here in California. (at H & R Block)....they told me we have to file seperate returns. That would me a loss of about $2000.00.....so I am looking for some who knows what they are doing now.