Annoying issue re: departure tax / T-slip

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markitzero
Posts: 14
Joined: Sat Dec 22, 2012 11:11 pm

Annoying issue re: departure tax / T-slip

Post by markitzero »

Trying to solve an annoying issue that I'm getting conflicting advice on from tax professionals.

I moved from Canada to the US in mid-2013 and am filing all of the "departure tax" forms, including the IRS forms on which I claim a stepped-up cost basis for the mutual funds that I held with Canadian institutions.

HOWEVER, here's what's giving me headaches: the T-slips that I received for my mutual fund holdings from the Canadian banks represent ALL OF 2013, right? So I don't know whether I should be be paying taxes to the CRA or IRS for those T-slip amounts.

The most reasonable option would appear to be to manually pro-rate the T-slip amounts, and therefore pay taxes on approx 40% of the total amount to the CRA (since I was a Canadian tax resident through May 2013) and 60% to the IRS as part of the PFIC / QEF disclosure.

HOWEVER, won't that trip a red flag in the CRA's automated system since I'm reporting only ~40% of the T-slip income compared to what's on the actual slips they receive from the banks?

(Alternatively, is there another way to address the situation above? I've been told that Canadian mutual funds DEFINITELY fall under the PFIC reporting requirement, so while my initial impulse had been to just pay 100% of the T-slip income to the CRA, I don't know how I could file the PFIC forms in the US but not report / pay taxes on any of the earnings, since I'd be making the QEF election).
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You don't pro-rate T-slips. You figure out what was paid to you as a Cdn resident, and what was paid to you as a US resident. You have all your statements.

I assume you neglectred to tell your banks, etc that you had left. That is important, for the reason you are now finding out.


For Cdn purposes:

If there is dividend income that you recieved as a US resident on those T-slips, you must remit 15% flat tax on that, separate form your 2013 departure return. On your departure return, you only report the pre-May income, and the deemed disposition.

And, you tell your broker to close your account, since you live in US, and transfer all your non-mutual funds to a US boker, and sell your Cdn mutual funds.

For US, I assume you are doing a dual status return? If not then there is nothing to split, you report all income for the year.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
markitzero
Posts: 14
Joined: Sat Dec 22, 2012 11:11 pm

Post by markitzero »

[quote="nelsona"]You don't pro-rate T-slips. You figure out what was paid to you as a Cdn resident, and what was paid to you as a US resident. You have all your statements.
[/quote]

Thanks.

I was under the impression that the ONLY place interest/dividends was reported was on the year-end T-slip they send me...is that not accurate?

Are month-by-month amounts reported on my mutual fund statements?

(IOW, you're suggesting that I can figure out the correct figure and not have to pro-rate...?)
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Yes, I'm suggesting you look at your statements. How else did you come up with your deemed disposition values, etc?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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