Serbinski Accounting Firms

Your income, according to CRA rules includes your WAGES, PLUS any 401(K) contributions you made, PLUS any FICA contributions your made. So, Box 1 + box 4 + box 6 + any amount in box 12 relating to 401(k). All converted to USD of course, at the yearly rate. Just to clear up any confusion, Box 1 on f...

For those who would like the "non simplified" version.. here goes...

The properties that are exempt from the deemed disposition are those are listed in subparagraphs 128.1(4)(b)(i) through (v), and can be summarized as follows:
(i) real property situated in Canada, Canadian resource properties and timber resource properties,
(ii) capital property used in, eligible capital property in respect of, and inventory of, a business carried on by the individual through a permanent establishment in Canada,
(iii) an excluded right or interest (defined in subsection 128.1(10) and described in more detail below),
(iv) where the individual is not a trust and was resident in Canada for 60 months or less during the 120 month period ending at the time of emigration, property owned by the individual when the individual last became resident in Canada, or property inherited during the period of Canadian residency, and
(v) in those cases where the individual returns to reside in Canada, property in respect of which the individual makes an election to “unwindâ€￾ the deemed disposition that occurred on the emigration from Canada.

Excluded rights or interests (see (iii) above) include the individual's rights under most pension and deferred income plans, including registered pension plans, retirement compensation arrangements, registered retirement savings plans, registered retirement income funds and foreign retirement arrangements. Excluded rights or interests also include rights to receive payments under annuity contracts or income-averaging annuity contracts, rights to receive benefits under the Canada Pension Plan, the Québec Pension Plan, the Old Age Security Act and the Saskatchewan Pension Plan, and rights to benefits under foreign social security arrangements. Employee stock options and interests in life insurance policies (other than segregated fund policies) are also excluded rights and interests.

All property other than that listed above, including other forms of taxable Canadian property, are subject to the deemed disposition rule of paragraph 128.1(4)(b). As noted, the deemed disposition will give rise to a capital gain or loss, or ordinary gain or loss, depending on the nature of the property. Under paragraph 128.1(4)(c), each property subject to the deemed disposition is deemed to have been reacquired by the individual at its fair market value.

In Canada you will need to file two returns for 2005: a) Your regular return up to the date of your departure in January. This includes world income to the date of your departure from Canada. In addition you need to declare the deemed disposition of all capital assets held (anywhere in the world) at...

The tax liability as calculated on your return, plus social security taxes are used for the credit.

Actually, you don't need to re register.

Just reset your password here:

http://forums.serbinski.com/profile.php ... ndpassword

Hmmm.

What is an eligible "Tax"?

From above:

"Revenue Canada is of the view that the tax for early withdrawal or on an excessive withdrawal would not be an income or profits tax "

The IRA early withdrawal penalty is NOT eligible for a foreign tax credit, nor as a deduction from income.

"A U.S. taxpayer may contribute to an individual retirement account, (“IRAâ€￾) which in some respects is similar to a registered retirement savings plan. Where funds are withdrawn before the individual reaches the age of 59 1/2, a tax for early withdrawal is levied under the Internal Revenue Code. An additional U.S. Excess Retirement Distributions Excise Tax can also be levied where an individual makes an excess withdrawal from an IRA.

Revenue Canada is of the view that the tax for early withdrawal or on an excessive withdrawal would not be an income or profits tax under 126(7)(c). Consequently, a Canadian taxpayer who received a taxable amount from an IRA, would not be able to claim a foreign tax credit under subsection 126(1) or a deduction under subsection 20(12) in respect of the tax paid. "

Technical Interpretation, Reorganizations and Foreign Division
May 19, 1993
Income Tax Act: 20(12); 126(1); 126(7)
CCRA File Number: 9304595

CCA is depreciation calculated on a declining balance basis. You use half of the rate for the class in the year of acquisition, and the full year on the remaining balance each year thereafter. You therefore never get to deduct all of the cost of your computer (Class 10, Normal rate 30%). If you sell...

You need an ITIN to be claimed as a dependent on anyone's U.S. tax return. As an H4, your spouse likely has a SSN, and will file a return in the U.S. for 2005, so you do need to apply as soon as possible, since IRS has been taking quite some time to issue these numbers.

Here is what you need to do: 1. Include all of your world income on your Canadian return, as nelsona says; 2. Prepare a "dual status return" for the U.S., since you have established U.S. residence and employment in 2005. (Although you also have the option of declaring yourself a U.S. resid...

Canadian law requires that anyone working in Canada be subject to Canadian withholding tax. This means that you will be primarily taxable in Canada, and will likely be eligible for an earned income exclusion and foreign tax credits in the U.S., thus eliminating your U.S. tax altogether. You should a...

Investing in a 401(k) is a good thing, especially if you are considered a non resident of Canada (which it sounds like you are). If you were a resident of Canada, then the pension contributions would be added to your Canadian income. I think that a 401(k) is good for the following reasons: 1. You de...

If you have incurred the expenses through the corporation, you really have no choice. You cannot assign revenues or expenses based on the amount of tax you could save.

You will be able to use any loss incurred in the first year of the corporation in a future year once revenues ramp up.

We have taken care to preserve and convert all existing posts to the new forum. The new software allows for more flexibility in reviewing and posting. Try changing the sort tabs on your browser. Other hints.. - Adjust the time (in GMT) for your location. Eastern standard time is GMT -5. - You can se...

Re: Canada U.S. Income Tax Convention:

The term “pensionsâ€￾ is defined in paragraph 3 for the purposes of the Convention. It includes any payment, whether or not periodic, under a superannuation, pension, or retirement plan, armed forces retirement pay, war veterans pension allowance, and amounts paid under a sickness, accident, or disability plan. The Third Protocol amended the definition of “pensionsâ€￾so as to clarify that it includes, for example, payments from Individual Retirement Accounts (IRAs) in the United States.

"Article XVIII
Pensions and Annuities
1. Pensions and annuities arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State, but the amount of any such pension that would be excluded from taxable income in the first-mentioned State if the recipient were a resident thereof shall be exempt from taxation in that other State."

Please note that the Treaty, as noted above, overrides domestic law in Canada, and certainly overrides Mr. Martin's comments.

If the Third Protocol defined a pension as an IRA; and
If a Roth IRA is an IRA; then
The Roth distribution should be free of tax in Canada, since the tax treatment in the U.S. is to exclude it from income... per Article XVIII (1).

As far as the jury being out.... this application of the Treaty has not yet been tested in court, to my knowledge.