Canadiian Living in US: various tax questions

ecurb · Post by **ecurb** » Wed Apr 13, 2011 2:51 pm

Hello, I have a few questions. My apologies if I missed the answers in previous postings (I have actually spent quite a lot of time looking through the very useful forum).

Background: I am a Canadian citizen who moved to the US last year under a TN visa. For 2010 I am filing an exit return in Canada and a 1040 in the US. The questions I have are as follows:

1. Can I claim 2010 Canadian tuition expenses (either as a deduction or a credit)? My university is a qualifying institution, and I don't see anything in the instructions that would prevent me from doing so. Also presumably the non-discrimination provision of the treaty would allow me to do so?

2. Similar question: can I claim interest paid in 2010 on loans used to pay tuition expenses?

3. I sold a mutual fund in Canada in 2010 resulting in a capital loss. Firstly, presumably I should file 1040 Schedule D so that I can make use of the loss in the US? Secondly, how do I calculate the loss? Do I use the exchange rate at time of purchase (2007) to calculate the basis, and the exchange rate at the time of sale to calculate the proceeds, or do I use the exchange rate at the time of sale for both purposes?

4. I hold some ETFs in Canada in an unregistered brokerage account. I received a T3 in Canada (statement of trust income). How do I declare the distributions on form 1040? Are they ordinary dividends on line 9a of the 1040? Do I need to complete a form 3520?

5. I hold a mutual fund in an RRSP in Canada. Presumably I should file a form 8891 electing to defer US tax? And presumably as I made no withdrawals from the RRSP in 2010 I can enter zero for lines 7a and 7b (distributions received from the plan during the year)? Anything else I need to do with respect to the RRSP?

Many thanks for your help. It is definitely appreciated.

nelsona · Post by **nelsona** » Wed Apr 13, 2011 3:36 pm

1. You can use the deductions as any US citizen going to school would use them -- THAT is how the non-discrimation cluae works. It doesn't maen that a deduction in canada MUST bae a deduction in US.

2. Yes, on the line for tuition interest.

3. all transactions take place in USD vzlue at the time of the transactions.

4. Ask me that in July

5. correct.

ecurb · Post by **ecurb** » Wed Apr 13, 2011 6:31 pm

Many thanks for your response. I just want to confirm I understand your response to question 3 correctly:

3a) Can you confirm that this means that I should use the exchange rate at the time of purchase to calculate the basis, but the exchange rate at the time of sale to calculate the proceeds? (This would mean that in certain circumstances the same event could give rise to a capital gain in Canada but a capital loss in the US (or vice versa)).

3b) Can you confirm that I can indeed claim the capital loss even though I moved to the US after the disposition? It seems almost too good to be true that I can get a deduction from income in the US up to $3,000 (in addition to using the loss in Canada to offset capital gains from the deemed disposition, and carrying forward any unused portion to future years).

nelsona · Post by **nelsona** » Thu Apr 14, 2011 5:53 am

3a) Yes.
3b) yes, as long as you file full year 1040. This, in effect means that for US purposes, you moved Jan 01, 2010.

skoper · Post by **skoper** » Wed Apr 20, 2011 5:54 pm

5) Dont forget to file Form TD 90-22.1 by June 30 (filed separately from the 1040)

JGCA · Post by **JGCA** » Thu Apr 21, 2011 9:09 pm

When you claim tuition fees on you CND departure return you can claim the tuition fees in on your T1 but since you have left Canada you can not claim the education deduction amount of $400 per month in case you have this is not allowed on departure.

nelsona · Post by **nelsona** » Fri Apr 22, 2011 5:10 am

The education deduction ammount can be claimed on the departure return, since it was incurred while resident.

JGCA · Post by **JGCA** » Fri Apr 22, 2011 5:36 pm

So the educational deduction is available for CND tuition, but then it must be when teh CND is claiming US tuition while they were resident in Canada and attended US university that it is not allowed, Nelsona is this so, thanks

nelsona · Post by **nelsona** » Sat Apr 23, 2011 2:45 pm

The education amount, and the tuition expense are separate matters.

JGCA · Post by **JGCA** » Sat Apr 23, 2011 3:28 pm

They may be seperate but on the form that a foreign university has to submitt like the TL11A the tuition is shown as well as teh months one atended the University either full time or part time, if one is claiming tuition while a non resident and qualifys to do so the education amount is not allowed yet it can be claimed in error since it is on teh same form, so in this aspect they are shown as is they both qualify and they do not both qualify.

I was trying to point out the need to distinguish between the 2 items that as you say are seperate but can be confusing to many.

nelsona · Post by **nelsona** » Sun Apr 24, 2011 7:09 am

he poster went to a Cdn university. The educationa amount qulaifies on the Cdn return, regardless of when he left canada.

The tuition credit is also claimable in canada regardless of when he left canada.

There was no mention of any US university. So there was no need to confuse anything.

You said "you can not claim the education deduction amount of $400 per month in case you have this is not allowed on departure" which made no sense, no matter how you back-track.

JGCA · Post by **JGCA** » Mon Apr 25, 2011 9:18 am

In this case the poster attended a CND university this rule does not affect him, I was bringing up a different scenario where one was in Canada left Canada in the year attends a US university get a tuition fee form as I mentioned and claims the tuition on the CND return also ONLY in this case the tuition is allowed but the education amount for the months as a non resident is not allowed, it was just an information tid bit not a statement about the posters case, I felt it was an informative statement for surfers looking at Tuition and related info , I have seen this case before and I am sure it is of use to others, but as you said in this case it was out of context.