Corp Question

Ottawa123 · Post by **Ottawa123** » Wed May 14, 2014 12:31 pm

A few years ago i was working in the US through my Canadian corp i had 2 employees working in Canada for me at the time.

The consultant company paid me through a check in the US and at the end of the term showed the money in my Canadian corp.

I filed my corp tax in Canada along with my personal taxes in Canada.

Now it seems like i should have filed those personal taxes in the US rather Canada. I am wondering how to fix this?

nelsona · Post by **nelsona** » Wed May 14, 2014 1:04 pm

What makes you think you had to file personal taxes in US?

I could understand you thinking that corporate taxes should have been filed...

but under the old treaty (before 2010?) you were personally exempt as long as you still lived -- by treaty -- in canada and had no establishment in US. Those rules changed and since then, you would have to been liable for personal tax even you lived in canada if you spent sufficient time in US (183 days in ANY 365 day period) ,as this in itself established a base.

So, when are we talking about?
Keep in mind that aside from treaty consideartioons, there is also statute of limitations on this.

Ottawa123 · Post by **Ottawa123** » Wed May 14, 2014 1:11 pm

The reason i asked about personal income tax and corp income tax is because i lived in the US for more then 183 days during that period i was told that i should file form 5471 since i am joining the ovdi process i have everything else covered but this is giving me a headache just have no idea how to follow up on this.
Thanks

Ottawa123 · Post by **Ottawa123** » Wed May 14, 2014 1:18 pm

oops and this is pre 2010
Thanks

nelsona · Post by **nelsona** » Wed May 14, 2014 1:42 pm

Looks like someone is trying to rake you.

Were you *living* in the US at the time. If you were, then why would you be filing as a Cdn resident? If not, then why are you needing OVDI? How long have you lived in US?

Ottawa123 · Post by **Ottawa123** » Wed May 14, 2014 2:09 pm

it was my first year here i was getting paid in the US but at the end of the year the Consulting company whom i worked for in Canada just placed everything in my corp so i just didn't know what to do called my Canadian accountant and he said just file it canada which i did, didnt thought of it much at the time

For ovdi/p i decided to join because i didnt disclose my Canadian account along with interest income.
Now i have to go back 8 years ...

My question is
Since i will be in the Ovdp program and the paychecks never went into my Canadian corp but in my perosnal bank in US

my question is should i fill form 5471? and refile personal tax return in US. IF so can i get any foreign tax credit?

Or
Should i just file a 1040 on the total amount given to me by the Canadian consultancy and file taxes on that.

Thanks

nelsona · Post by **nelsona** » Wed May 14, 2014 2:35 pm

I've never heard of going back eight years. Who is giving you this advice?
You still ahven't answered whether you were a US resident in the year in question. If not, under the rules at that time, none of the income was subject to US taxation. OVDI doesn't apply if you weren't resident and di not have to file a 1040.

On the separate issue of your corporation, , the correct corporate filing is 1140-F. That will determine if you need 5471. You would need 1140-F whether you were resdent or not, if you were doing buisness in US, as a protective measure.

nelsona · Post by **nelsona** » Wed May 14, 2014 2:42 pm

Remember this rule: whether a source of incoem is taxable has NOTHING to do with what account it was put in, or in what currency it was paid.

Ottawa123 · Post by **Ottawa123** » Wed May 14, 2014 3:11 pm

Correct i was a US resident for the tax year in question and even now.

The 8 year i am told is for the OVdp from 2005-2012

My question remains

since the money was deposited in my personal bank account in the US and then the consulting company decided to show in my corporate on which i have already filed corp taxes.

Should i file 5471 and refile my personal tax return in the US?
If i take the amount of personal taxes i filed in Canada convert and refile on that same amount would i get any Foreign income tax credit?

OR should i file a 1040 EZ on the total amount that was paid to me and forget about 5471

Thanks

nelsona · Post by **nelsona** » Wed May 14, 2014 4:55 pm

Then you should not have been reporting the wages in canada. I don't know the process on how to back-file spo far back if they will let you claim foreign tax credits in canada (that would be where you would need to claim).

But as it stands, you owe US taxes for 200X. Why the reluctance to say what year it was and how you filed? I've never heard of ovdi going after failure to file a return so far back, but there you go. Should have avoided OVDI is my guess.

If IRS is insisteing on tax returns for the mysterious year in question, then ou need to file 1040 AND You need to file 1140-F, which will determine 5741. 1040 and 5741 are not mutually exclusive. You probably need both.

I trust you have wound down that Cdn corp?

nelsona · Post by **nelsona** » Wed May 14, 2014 4:55 pm

If not, you need pro help.

Ottawa123 · Post by **Ottawa123** » Wed May 14, 2014 5:00 pm

The year in question is 2007, the canadian corp was closed the following year.
i joined the ovdi because of not filing fbar and unreported bank interest.

The lawyer i am going thoruhg is saying just file the 5471 and that's that.

I think for ovdp you need to go back and amend return for 8 years.

My other option is to not file 5471 and just amend the return.
I am just confused now

Ottawa123 · Post by **Ottawa123** » Wed May 14, 2014 5:15 pm

I am going through a lawyer the problem is that these lawyers sometimes seems like have no clue of what needs to be done.

My question is that i am being told that ovdi process goes back 8 year is this true? If so then i need to fix my 2007 return no?

Ottawa123 · Post by **Ottawa123** » Wed May 14, 2014 6:18 pm

Remember this rule: whether a source of incoem is taxable has NOTHING to do with what account it was put in, or in what currency it was paid

Thanks based on this i might just file 5471...
Will talk to my lawyer
Thanks once again

Ottawa123 · Post by **Ottawa123** » Thu May 15, 2014 4:47 pm

I've never heard of ovdi going after failure to file a return so far back,

Nelson this didnt come from my attorney i was just thinking out loud on my own to fix this first but if i don't have to i wont i'll add the missing income from bank account and go from their
Will check with my attorney
Thanks