Serbinski Accounting Firms

You need to be careful here. If you are living and working in the US with any degree of permanence, and your wife is coming to visit you instead of you coming back to visit her in Canada; you may be considered a deemed non-resident of Canada via treaty and need to file a departure return and abide b...

Tremendous insight as always Nelsona. Greatly appreciated!!! Yes, I suppose it generally makes no sense trying to reduce your taxes on the US side, as your ultimate tax liability is to Canada. Even if I can reduce the tax to zero on the US side, it doesn't really help me OVERALL; as I still owe tax ...

Hi Nelsona, I’m curious about your comment indicating that you have the option of taxing this income at graduated rates instead of the flat 15%. Do you always have this option? If so, and your pension income is relatively small, would it not benefit most people that have the correct 15% non-reside...

I'm in agreement with you on this. Pretty much everything I came across on this topic mentions a switch needs to take place; hence the term "crystallize". No she didn't mention anything about not being able to deal with US residents. This was a pretty "high level" presentation th...

Tremendous insight as always Nelsona, much appreciated.

Carol Bezaire from Mackenzie Investments. I questioned her on this, but she was adamant that a switch did not need to be done.

Overall the presentation was pretty accurate, but there were a couple of other small errors I noticed as well.

Hi Nelsona, I just came back from a cross border tax seminar and they were talking about crystallizing the gains in your RRSP before departure. The presenter mentioned that you do NOT need to actually sell or switch the funds to "bump-up" the ACB. All you need for the IRS is a statement of...

This of course assumes you file a 1040 reporting your worldwide income in the US for the full year. If not, then I'm not so sure the IRS will give you credit for this, as they would know this should have been reported on a Canadian non-resident return to be considered Canadian source income.

Hi Betty,

I’m no expert, but this is my understanding of your situation. Generally speaking, all of the work that was done remotely from the US after you departed Canada should not be taxable in Canada; as it was not physically completed in Canada.

As you gathered from what Nelsona said elsewhere on this forum, it would have been much better if your former employer just wrote you a cheque and did not withhold any taxes, CPP and EI. No withholding of any kind was required on this income.

The problem you might run into if trying to claim a foreign tax credit on the US side is the IRS may deny it. This is because it was not supposed to be taxable in Canada. It’s as if you have given CRA a voluntary gift. However, it may be difficult for the IRS to determine this. They will likely just assume all of the T4 income was earned before you left Canada and may incorrectly give you credit for this.

The correct way to deal with this is likely to file a T1 Adjustment for your departure return to exclude this income. This should likely be deducted on line 256 and indicate something like “US Source Income taxed incorrectly on my T4â€￾. This will allow you to recover the tax you paid on this income to Canada, but I don’t think you will be able to recover the CPP and EI. If you are going to do this, you should also get a letter from your employer explaining what amount of income was earned remotely and provide this to CRA with the adjustment.

Scot, the GST/PST can however be added to the purchase price of the property in Canada to increase your adjusted cost base (ACB); which will lower any potential capital gains tax on the eventual sale of the property.

Thanks for correcting me on this Nelsona!! I was aware of the resourcing rules for wages and dividends, but did not know this applied to contractor income as well. But now that I think about it, it makes perfect sense.

Are the re-sourcing rules applicable to Greencard holders as well?

Yes correct, you will be able to claim a foreign tax credit for this on the Canadian side; including any FICA she pays on this (SS etc). I'm not entirely sure how best to handle this on the US side, most of my experience is on the Canadian side. Because of the totalization agreement between Canada a...

Yeah if your wife is a US citizen you obviously will not be able to exempt this income on the US side via treaty. This only works if you are a Canadian resident and not a US resident for tax purposes. You will file a part-year return on the Canadian side, with some credits being prorated because you...

It’s not quite clear by your post, but I assume you are a Canadian resident. If so, you can use the treaty to exempt this business income in the US and only pay tax on it in Canada. This is because you were physically in the US for less than 183 days earning this income. This income would be repor...

Yes I would agree that they are long, so sorry about that. I just figured that by getting it all out there in a few larger than normal posts, it would save a lot of small follow-up questions. I can also appreciate that it would be unethical to use this firm’s website for this. I should have sent y...

Furthermore I would be more than willing to pay you for your advice if that is satisfactory to you.