Questions re 1116 and Cdn.Bank Accounts/credit cards

chrisontario · Post by **chrisontario** » Thu Mar 22, 2007 8:07 am

Hi, this is a great forum. Thank you. I have read some posts and have a couple of questions re 1116 and bank accounts below:

re 1116: I am completing my first 1116 for the 2006 tax year. In a previous post, I read that T4/T5 are not required to be submitted for 1040/1116. Did I misinterpret that? I was planning on providing copies of my T4//T5 on my 1116, with an explanation of what conversion rate I used.

re bank accounts/credit cards: I still have my Cdn bank cheq.accounts (US$ & Cdn$) and a Cdn. credit card. I have read posts that it's advisable to maintain these while in the US. They are both listed at my family address. If I change the address to a US one, won't the bank cancel my account, or do they allow foreign addresses? Thank you.

nelsona · Post by **nelsona** » Thu Mar 22, 2007 8:44 am

IRS requires very little documantation when submitting a paper return. Nothing from canada is to be sent. You keep all paperwork until asked.

Your bank is required to withhold non-resident tax on your interset, so they NEED to know that you are in US. Your credit card should come to your address. there is no problem with either accounrt having a US address.

chrisontario · Post by **chrisontario** » Thu Mar 22, 2007 12:29 pm

Thank you for your response, nelsona.

My Cdn. bank accounts don't earn any interest, but I will notify them. I want to continue to write cheques from my US$ acct. in Canada to transfer money to my US account here. I did not realize that Cdn. credit card companies allowed US addresses for their cards.

If the IRS wants as little documentation on Cdn. receipts for paper returns, I'm wondering if I can efile the 1040? My husband is a permanent resident here, so we're filing jointly. His only documentation is a W2 and a 1099 for interest earned.

nelsona · Post by **nelsona** » Thu Mar 22, 2007 12:50 pm

Yes you can e-file.

Rememebr that you have to report foreign accounts on form TD F 90-22.1 and send to Detroit. RRSPs also have special requiremnts.

I don't see the advantage of keeping a non-interest bearing US$ account in canada. I see keeping a Cdn account to avoid exchages when paying something in canada.

Enlighten me.
I would want to write one cheque and close it.

chrisontario · Post by **chrisontario** » Thu Mar 22, 2007 1:55 pm

Hi nelson

I have been reading about all the extra paperwork Canadians are required to complete for the 1040, so yes, I do know about the form to submit to Detroit and the RSP forms. For efiling, I am going to tackle TurboTax, and hopefully they will calculate my foreign tax credit. I haven't checked the software, but if they don't provide for the RRSP form, will the IRS accept a paper copy of just that form mailed to them?

re the bank accounts: Actually there is interest earned on both accounts: 0.25%; it's so minor that I didn't realize I was earning any interest! I'm keeping the US$ account as it allows for higher exchange rate from Cdn. to US and vice versa.

nelsona · Post by **nelsona** » Thu Mar 22, 2007 3:45 pm

Well, the interst is subject to NR tax, so for every dime you get, they should be sending a penny to CRA.

The low interst rate is more than making up for the 'supposed' exchange benefit, which I would venture to say is illusory.