Hi,
In this thread, I have a specific question - if I file as a deemed resident (living and working in Canada for US employer for all of 2006), and have paid support in terms of rental for 10 months for my brother who lives in the US, can i claim him as a dependent on my Canadian return?
I make about CAD 115k so having a dependent to deduct should help. In addition, I managed to sock away CAD 15k in my RRSP.
Thanks.
US Citizen, filing as "deemed resident"
Moderator: Mark T Serbinski CA CPA
First off, you will be filing as a RESIDENT of Canada, not deemed resident. You should file areturn for the province in which you reside, ratger than the deemed resident one.
Did you check if your brother meets the criteria for dependant? If he does, then the fact that he is US citizen would not disqualify him.+
Did you check if your brother meets the criteria for dependant? If he does, then the fact that he is US citizen would not disqualify him.+
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
[quote="nelsona"]First off, you will be filing as a RESIDENT of Canada, not deemed resident. You should file areturn for the province in which you reside, ratger than the deemed resident one.
Did you check if your brother meets the criteria for dependant? If he does, then the fact that he is US citizen would not disqualify him.+[/quote]
Hello Nelsona:
1. I did file as a "Deemed Resident" in 2005, got a letter from CRA Intl. Office asking for dates I was outside of Canada - I gave them all the dates I went to US for holiday, shopping trips, work permit renewal across the border etc and that satisfied them.
2. I paid my brother's entire rent for 10 months. Based on IRS criteria, that is more than half his support. On my US return, I could claim him as a dependent. But my question is: he was never in Canada in 2006 and his expenses weren't paid in Canada and so, can I claim him as a dependent in Canada?
Thanks.
Did you check if your brother meets the criteria for dependant? If he does, then the fact that he is US citizen would not disqualify him.+[/quote]
Hello Nelsona:
1. I did file as a "Deemed Resident" in 2005, got a letter from CRA Intl. Office asking for dates I was outside of Canada - I gave them all the dates I went to US for holiday, shopping trips, work permit renewal across the border etc and that satisfied them.
2. I paid my brother's entire rent for 10 months. Based on IRS criteria, that is more than half his support. On my US return, I could claim him as a dependent. But my question is: he was never in Canada in 2006 and his expenses weren't paid in Canada and so, can I claim him as a dependent in Canada?
Thanks.
That is what I'm asking you: does your brother meet all the criteria under CDN tax law. IRS rules are much more lax on dependants (most Cdn couples can't even claim their OWN kids). If he does, except for the fact that he is in US, then you are allowed to claim him.
Look over the guide.
Look over the guide.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
[quote="nelsona"]That is what I'm asking you: does your brother meet all the criteria under CDN tax law. IRS rules are much more lax on dependants (most Cdn couples can't even claim their OWN kids). If he does, except for the fact that he is in US, then you are allowed to claim him.
Look over the guide.[/quote]
Actually, i called the CRA's Intl. Tax Office today and spoke with them - told them the story and was quite upfront with them. They'll call me back with the determination of whether i can deduct him.
If I cannot, I'm screwed - except for RRSPs, I can't get ANY benefit.
Look over the guide.[/quote]
Actually, i called the CRA's Intl. Tax Office today and spoke with them - told them the story and was quite upfront with them. They'll call me back with the determination of whether i can deduct him.
If I cannot, I'm screwed - except for RRSPs, I can't get ANY benefit.
I wouldn't necessarily believe what CRA tells you, they ar only slightly less moronic that IRS agents.
But, as I said, it is very difficult to claim someone as a dependant in Canada, much more so when they are not living with you.
But, as I said, it is very difficult to claim someone as a dependant in Canada, much more so when they are not living with you.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
[quote="nelsona"]I wouldn't necessarily believe what CRA tells you, they ar only slightly less moronic that IRS agents.
But, as I said, it is very difficult to claim someone as a dependant in Canada, much more so when they are not living with you.[/quote]''
*Sigh*....
They pointed out to me that a sibling can be claimed as a dependent only if resident in Canada.
This whole thing is moronic - as a deemed resident (my best case vs being factually resident), i am supposed to report my world wide income and pay tax on it. But they don't want me to deduct my US liabilities. :evil:
But, as I said, it is very difficult to claim someone as a dependant in Canada, much more so when they are not living with you.[/quote]''
*Sigh*....
They pointed out to me that a sibling can be claimed as a dependent only if resident in Canada.
This whole thing is moronic - as a deemed resident (my best case vs being factually resident), i am supposed to report my world wide income and pay tax on it. But they don't want me to deduct my US liabilities. :evil:
Sounds like you hve a perfect case for XXV.3:
3. In determining the taxable income of an individual who is a resident of a Contracting State there shall be allowed as a deduction in respect of any other person who is a resident of the other Contracting State and who is dependent on the individual for support the amount that would be so allowed if that other person were a resident of the first-mentioned State.
Since yur brotherlives in US, he is treated like he lives in Canada.
By the way, I still don't know why you insist on filing as a demmed non-residdnt, since there is no advantgae of doing so. Do you live out of a hotel or something? 183 days in Canada for several years without being a resident is pretty quirky.
3. In determining the taxable income of an individual who is a resident of a Contracting State there shall be allowed as a deduction in respect of any other person who is a resident of the other Contracting State and who is dependent on the individual for support the amount that would be so allowed if that other person were a resident of the first-mentioned State.
Since yur brotherlives in US, he is treated like he lives in Canada.
By the way, I still don't know why you insist on filing as a demmed non-residdnt, since there is no advantgae of doing so. Do you live out of a hotel or something? 183 days in Canada for several years without being a resident is pretty quirky.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
[quote=nelsona]Sounds like you hve a perfect case for XXV.3:
3. In determining the taxable income of an individual who is a resident of a Contracting State there shall be allowed as a deduction in respect of any other person who is a resident of the other Contracting State and who is dependent on the individual for support the amount that would be so allowed if that other person were a resident of the first-mentioned State.
Since yur brotherlives in US, he is treated like he lives in Canada.
By the way, I still don't know why you insist on filing as a demmed non-residdnt, since there is no advantgae of doing so. Do you live out of a hotel or something? 183 days in Canada for several years without being a resident is pretty quirky.[/quote]Thanks for bearing with my whining...
Well, for 2004, i filed as an ON resident, in 2005 I owed $1200 but that came down to $83 if I filed as deemed resident so I did just that. I got a letter from the CRA asking me for all the dates I went outside of Canada and I gave them a list of everytime I crossed over - Buffalo shopping, long weekends in Ohio, work permit renewal step-out and they were ok with it. Saving $1100 for the 2005 tax yr. was why i filed that way. Now I feel that I should stick to that category for 2006 as well - no sense in rocking the boat too much.
Where did you get XXV.3 from? The US-Canada Tax Treaty?
3. In determining the taxable income of an individual who is a resident of a Contracting State there shall be allowed as a deduction in respect of any other person who is a resident of the other Contracting State and who is dependent on the individual for support the amount that would be so allowed if that other person were a resident of the first-mentioned State.
Since yur brotherlives in US, he is treated like he lives in Canada.
By the way, I still don't know why you insist on filing as a demmed non-residdnt, since there is no advantgae of doing so. Do you live out of a hotel or something? 183 days in Canada for several years without being a resident is pretty quirky.[/quote]Thanks for bearing with my whining...
Well, for 2004, i filed as an ON resident, in 2005 I owed $1200 but that came down to $83 if I filed as deemed resident so I did just that. I got a letter from the CRA asking me for all the dates I went outside of Canada and I gave them a list of everytime I crossed over - Buffalo shopping, long weekends in Ohio, work permit renewal step-out and they were ok with it. Saving $1100 for the 2005 tax yr. was why i filed that way. Now I feel that I should stick to that category for 2006 as well - no sense in rocking the boat too much.
Where did you get XXV.3 from? The US-Canada Tax Treaty?
By the way, for get the "quotes" they don't work, your just compounding posts.
A deemed resident files just like a CDn resident, reporting all world income don't they?
The only difference is that (on everything other than wages) you pay a fed surtax, which I always thought was higher than ON tax. On your wages you pay Ontario tax. I don't see how filing deemed in better than filing ion Ontario.
Still puzzled... are you sure you haven't been classified as a "deemed NON-resident" as this makes more sense with what you are describing (counting days, proving US residency, etc). This would also yeild the tax savings you are talking about. For you to be a "deemed resident" under the 183 day rule you have to prove that you DON't live ANYWHERE. Is that what you have done?
On the issue of 'dependant', I still don't see how your brother would be disqualified 'because he didn't live in Canada'. This is not a criterion. living WITH YOU is. Maybe the fact that you have successfully proven that you don't live ANTWHERE, has cost you the ability to use the treaty.
A deemed resident files just like a CDn resident, reporting all world income don't they?
The only difference is that (on everything other than wages) you pay a fed surtax, which I always thought was higher than ON tax. On your wages you pay Ontario tax. I don't see how filing deemed in better than filing ion Ontario.
Still puzzled... are you sure you haven't been classified as a "deemed NON-resident" as this makes more sense with what you are describing (counting days, proving US residency, etc). This would also yeild the tax savings you are talking about. For you to be a "deemed resident" under the 183 day rule you have to prove that you DON't live ANYWHERE. Is that what you have done?
On the issue of 'dependant', I still don't see how your brother would be disqualified 'because he didn't live in Canada'. This is not a criterion. living WITH YOU is. Maybe the fact that you have successfully proven that you don't live ANTWHERE, has cost you the ability to use the treaty.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
No more quotes. :)
1. Trust me Nelsona, last yr., I would have had to pay $1200 if I filed as ON resident but the federal surtax was lower enough to make that figure $83. But yes, deemed wouldn't be as good as a deemed non-resident which would yield me the lower tax rate of filing in the US only.
2. I haven't proven anything and haven't received any classification notices - I didn't file the NR-73 (the CRA guy was asking me to do that this yr.) and my Notice of Assessment didn't make a mention of non-resident status either.
Look at how CRA defines a deemed resident:
* stay in Canada for 183 days or more (the 183-day rule) in the tax year; -> I DO!
* don't have residential ties with Canada; and -> I have closer ties with US, only residential ties are an apartment here (I pay apartment rent in US too), a Canada bank account for my payroll deposit and OHIP coverage.
* aren't considered a resident of another country under the terms of a tax treaty between Canada and that country. -> CANNOT be resident of US since living in Toronto since Jan. 2004
I can see how #2 is debateable but it saved me $1100 in 2005 by going "deemed" and I figured "deemed" might let me claim more US deductions that might not be available to "factual" residents.
Regarding your question about not being able to claim my brother as a dependent, I had the CRA call me back with this (I'll have to use the non-functional quotes, sorry);
[quote]¶ 18. An individual who is factually resident in Canada is not entitled to the equivalent-to-spouse tax credit in respect of a non-resident person, except for a non-resident child of the individual (MY note: See? Being "Factual resident" isnt helpful). In most cases, however, the equivalent-to-spouse tax credit will not be available for a non-resident child. This is because the child usually is not supported in a residence in which both the individual and the non-resident child live.
If an individual is not factually resident in Canada, but, under subsection 250(1), is deemed to be resident in Canada, and the other requirements to claim the equivalent-to-spouse tax credit are met, the individual will be entitled to the equivalent-to-spouse tax credit for:
* the individual's child; or
* a qualified relative (see ¶ 13 above) who is also deemed to be resident in Canada under subsection 250(1).
[/quote]
He's a qualified relative and I'm not a factual resident but he's not a deemed resident of Canada.
Unless you have something from the Tax Treaty that overrides that. :)
1. Trust me Nelsona, last yr., I would have had to pay $1200 if I filed as ON resident but the federal surtax was lower enough to make that figure $83. But yes, deemed wouldn't be as good as a deemed non-resident which would yield me the lower tax rate of filing in the US only.
2. I haven't proven anything and haven't received any classification notices - I didn't file the NR-73 (the CRA guy was asking me to do that this yr.) and my Notice of Assessment didn't make a mention of non-resident status either.
Look at how CRA defines a deemed resident:
* stay in Canada for 183 days or more (the 183-day rule) in the tax year; -> I DO!
* don't have residential ties with Canada; and -> I have closer ties with US, only residential ties are an apartment here (I pay apartment rent in US too), a Canada bank account for my payroll deposit and OHIP coverage.
* aren't considered a resident of another country under the terms of a tax treaty between Canada and that country. -> CANNOT be resident of US since living in Toronto since Jan. 2004
I can see how #2 is debateable but it saved me $1100 in 2005 by going "deemed" and I figured "deemed" might let me claim more US deductions that might not be available to "factual" residents.
Regarding your question about not being able to claim my brother as a dependent, I had the CRA call me back with this (I'll have to use the non-functional quotes, sorry);
[quote]¶ 18. An individual who is factually resident in Canada is not entitled to the equivalent-to-spouse tax credit in respect of a non-resident person, except for a non-resident child of the individual (MY note: See? Being "Factual resident" isnt helpful). In most cases, however, the equivalent-to-spouse tax credit will not be available for a non-resident child. This is because the child usually is not supported in a residence in which both the individual and the non-resident child live.
If an individual is not factually resident in Canada, but, under subsection 250(1), is deemed to be resident in Canada, and the other requirements to claim the equivalent-to-spouse tax credit are met, the individual will be entitled to the equivalent-to-spouse tax credit for:
* the individual's child; or
* a qualified relative (see ¶ 13 above) who is also deemed to be resident in Canada under subsection 250(1).
[/quote]
He's a qualified relative and I'm not a factual resident but he's not a deemed resident of Canada.
Unless you have something from the Tax Treaty that overrides that. :)
I think section XXV.3 that you quoted - well, the CRA phone guys wouldn't readily know of that. And that'd override what I quoted above from the Personal Credits bulletin:
http://www.cra-arc.gc.ca/E/pub/tp/it513 ... P139_17712
But I'm a little concerned about your concern about my deemed resident status - are we ok on that? If that's fine, then I'll use the tax treaty provision to claim the benefit.
http://www.cra-arc.gc.ca/E/pub/tp/it513 ... P139_17712
But I'm a little concerned about your concern about my deemed resident status - are we ok on that? If that's fine, then I'll use the tax treaty provision to claim the benefit.
I'm certainly NOT OK with your DR claim.
Since you are a US citizen living in canada, you MUST adghere to the treaty, and that means that by definition, you live in one country or the other.
Look over the Treaty definition of residence. It doesn't allow for 'neithr', so you are either Cdn resident, or US resident, even if it is only due to your US citizenship. Your economic ties in canada would seem to indicate (and the sattement "living in Toronto"), would indicate that you area Cdn resident. but just becuae you have sufficient ties in both countries doesn't make you a non-resident of BOTH countries. (which is a pre-requisite of DR status).
Based on what you have said I would say that you are resident, pure and simple, like it or not. How you were able to convince CRA that you were not a US resident in 2005 is beyond me.
You are EITHER a US resident, or a Cdn one. Pick one and go with it.
Since you are a US citizen living in canada, you MUST adghere to the treaty, and that means that by definition, you live in one country or the other.
Look over the Treaty definition of residence. It doesn't allow for 'neithr', so you are either Cdn resident, or US resident, even if it is only due to your US citizenship. Your economic ties in canada would seem to indicate (and the sattement "living in Toronto"), would indicate that you area Cdn resident. but just becuae you have sufficient ties in both countries doesn't make you a non-resident of BOTH countries. (which is a pre-requisite of DR status).
Based on what you have said I would say that you are resident, pure and simple, like it or not. How you were able to convince CRA that you were not a US resident in 2005 is beyond me.
You are EITHER a US resident, or a Cdn one. Pick one and go with it.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing