Dual Citizen living in US - Made interest on CDN bank account

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musca001
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Joined: Thu Jan 31, 2019 9:13 pm

Dual Citizen living in US - Made interest on CDN bank account

Post by musca001 » Thu Jan 31, 2019 9:23 pm

Hi,

I'm a dual citizen living in the US. My tax reporting in the US is very straightforward (ie regular job, etc etc).

I purchased a condo in Canada a long time ago (which hasn't been built yet) and moved some of the money to a CDN bank account which made interest while the builder is dragging his feet building the thing (believe or not it was supposed to be completed mid-2017). In hindsight I should have just kept the money in the US until it was built, but that is water under the bridge.

Now I'm in a position where I have to report the interest. Is this a complicated process? Does anyone know what forms to fill out? Any recommendations on minimizing the amount of tax I'm going to pay? If I have to go the accountant route I'm fine with that too. If you know of a good accountant in the Bay area please let me know.

Thank you,
Dan

nelsona
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Re: Dual Citizen living in US - Made interest on CDN bank account

Post by nelsona » Fri Feb 01, 2019 8:19 am

You report the interst on schedule B, you also report the existence in the account on FBAR.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

musca001
Posts: 4
Joined: Thu Jan 31, 2019 9:13 pm

Re: Dual Citizen living in US - Made interest on CDN bank account

Post by musca001 » Fri Feb 01, 2019 9:22 pm

Thanks...but won't that result in dual-taxation? In other words US taxes me on the interest, and so does Canada? I guess that is my confusion. I thought there was some kind of tax treaty where you wouldn't be double-taxed? Don't I need to file something in Canada AND the US? If not, then I'll be a happy camper lol!

nelsona
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Re: Dual Citizen living in US - Made interest on CDN bank account

Post by nelsona » Sat Feb 02, 2019 3:33 pm

What tax are you paying in Canada on bank interest? there should be none.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

nelsona
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Re: Dual Citizen living in US - Made interest on CDN bank account

Post by nelsona » Sat Feb 02, 2019 3:33 pm

But in general, any tax you pay in Canada on income that you report in US will be given as a tax credit on your US return. That's always how it works.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

musca001
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Re: Dual Citizen living in US - Made interest on CDN bank account

Post by musca001 » Sat Feb 02, 2019 4:05 pm

Interesting. I was sure Canada wouldn’t turn a blind eye to taxable interest. Unless like you say I pay all the taxes in the US, and somehow the tax treaty takes care of the rest. I’ll look at schedule B as pointed out earlier and hopefully will get some guidance from there. Thanks again.

nelsona
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Re: Dual Citizen living in US - Made interest on CDN bank account

Post by nelsona » Sat Feb 02, 2019 4:44 pm

Non residents of Canada do not pay Cdn tax on bank interest. It has been like that for many years now. It is not really a tax treaty issue. It applies to all non-residents of Canada. You must also inform your bank that you are US resident.

US residents pay US tax on worldwide interest, reported on Schedule B, and they report the existence of foreign accounts on schedule B, and FBAR.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

ND
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Re: Dual Citizen living in US - Made interest on CDN bank account

Post by ND » Wed Feb 06, 2019 8:00 pm

Don't forget to consider 8938 on your 1040 if you exceed the minimum threshold thru this and any other non-US specified assets.

RE: If you know of a good accountant in the Bay area please let me know.

Contact Wayne Baxter wbaxter@onecapital.com
Executive Director

3075 Townsgate Road, Suite 350

Westlake Village, CA 91361

D: 805.719.4211

Toll Free: 877.348.0045

T: 805.409.8150

F: 805.870.7677

While Wayne isn't a CPA, he's networked with them, specializes in helping the 1,000,000 Canadians transplanted into California with cross-border financial needs and with dual license can manage your accounts on both sides of border

musca001
Posts: 4
Joined: Thu Jan 31, 2019 9:13 pm

Re: Dual Citizen living in US - Made interest on CDN bank account

Post by musca001 » Wed Feb 06, 2019 8:56 pm

ND,

Thanks for the information. Looked at the form and geez....nothing is simple when it comes to taxes :(

Dan

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