Apologies for the lengthy post, but don’t see any way around it in order for you to have sufficient info to answer properly. In fact, there are extensive and extenuating health-related circumstances left out, which we may get to in the fullness of time.
Background:
I’m a US citizen, retired from the US Air Force in 1992, moved to Canada in 1995, when I married a Canadian citizen. In 1995 I began working for a Canadian technology company, Digital Processing Systems (DPS), in Markham. In 1997 I became a “Landed Immigrantâ€. In 1999 the company moved me to DPS-US, in Cincinnati. We expected to stay indefinitely, we sold our home in Toronto, and my wife applied for a US green card. A year later DPS was acquired by another company, there was a big corporate shake-up, and I was promoted and brought back to the Markham office. Now we’re getting to the tax ramifications…
The problem:
In Canada I used a Canadian CMA to file my taxes who said he understood both sides of the border. (How many times have you heard that one?) He filed my 2000 Canadian tax returns electronically, in April of 2001. (I had a US CPA handle my US filings, and there have been no problems.) In 2006 CRA contacted me to let me know that they had never received my 2000 return, and were assessing late penalties, etc., etc. I sent them a copy of the 2000 return, as well as the accountant’s letter stating that he had filed, and the date of filing. CRA’s response was to say that they’d never seen the return before, my accountant had not filed my US income properly, and they assessed me $21k in additional taxes (exchange rate at the time being 1.48), plus an additional $21k in late fees and interest.
[It remains a mystery to this day where my initial 2000 filing went. CRA has of course ignored the possibility that they lost it, and insists upon dating their penalties from 2000 instead of the date of their notification of me of the “missing†return.]
Today’s question:
I have several levels of questions to pursue, but seems to me the Big One, or at least the initial one, is this: do I owe Canada any taxes at all for the six months of 2000 that I worked in the US?
I was a US citizen, living in the US, working for a US company (albeit a branch of a Canadian company, but an independent branch) with no plans to move back to Canada until at least retirement. I was paid locally and banked at a local bank. In that year I lived in the US about a month over the 183-day mark, as did my wife.
Depending upon the answer to the above question, there may be more…
Thanks.
US citizen, sometime resident of Canada: tax liability?
Moderator: Mark T Serbinski CA CPA
No, you should not have to report your US wages on your 1999 or 2000 Cdn tax return.
HOWEVER, you do need to make sure that these three things were handled properly (and given that you had 2 different people handle these things, I can almost guarantee that they were not).
1. Your 1999 return MUST have a departure date on it, and you must have reported all assets as if sold on the day you left.
2. Your 1999 and 2000 IRS return should either have been filed as a part-year resident (married filing separately), or, if joint, have included all CDN income for 1999 and 2000.
3. Your 2000 Cdn return should have an ENTRY date.
Notwithstanding any of these likely errors, there is no way that you should be held liable for this loss of your return all the way back to 2001, THAT you should appeal.
HOWEVER, you do need to make sure that these three things were handled properly (and given that you had 2 different people handle these things, I can almost guarantee that they were not).
1. Your 1999 return MUST have a departure date on it, and you must have reported all assets as if sold on the day you left.
2. Your 1999 and 2000 IRS return should either have been filed as a part-year resident (married filing separately), or, if joint, have included all CDN income for 1999 and 2000.
3. Your 2000 Cdn return should have an ENTRY date.
Notwithstanding any of these likely errors, there is no way that you should be held liable for this loss of your return all the way back to 2001, THAT you should appeal.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks very much. You are, of course, correct in your prediction that the three items you list were not done. None were. I assume (and certainly hope!) that we can file amended returns to correct these "oversights", and we'll be contacting the firm offline to get the help we need.
One further Q for the forum: how do we stop the hemorraghing of interest and penalty monies while we pursue our amendments and appeal? Do we have to pay, under protest, what CRA says we currently owe (~$75k), and hope to get much of it back in the end, or is it possible to cut a temporary deal by paying a significant portion of the total and get the interest/penalties stopped for at least a month or two?
FYI, we're pretty well tapped out due to the health problems I referred to in my original post, but we have family resources which will loan, I repeat, loan, us the money to feed the CRA beast its $75k if that's what it takes to stop the bleeding while we seek redress.
Thanks again.
David
One further Q for the forum: how do we stop the hemorraghing of interest and penalty monies while we pursue our amendments and appeal? Do we have to pay, under protest, what CRA says we currently owe (~$75k), and hope to get much of it back in the end, or is it possible to cut a temporary deal by paying a significant portion of the total and get the interest/penalties stopped for at least a month or two?
FYI, we're pretty well tapped out due to the health problems I referred to in my original post, but we have family resources which will loan, I repeat, loan, us the money to feed the CRA beast its $75k if that's what it takes to stop the bleeding while we seek redress.
Thanks again.
David
David