Reminder of our situation.
I am a US citizen who works for a US organization. My wife is a dual citizen (Canadian/US) who is working for a Canadian organization. We live much of our time in Europe. We file a US joint tax return and wife a Canadian tax return.
If we have a joint savings account, GIC's or even brokerage held jointly in Canada, how will the gains be taxed and by which country?
Thank you.
Taxes on joint savings account or GICs
Moderator: Mark T Serbinski CA CPA
When you say US or Cdn "organization", what are you referring to: gov't agencies, or merely companies based in those countries.
If it is merely companies, I'm wondering why your spouse would be filing in Canada.
And are you being taxed in Europe? If not, why not?
That will determine where what gets paid in your question.
If it is merely companies, I'm wondering why your spouse would be filing in Canada.
And are you being taxed in Europe? If not, why not?
That will determine where what gets paid in your question.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Companies. We would like to establish my wives residency in Canada with the possibility of moving there permanently in the future. We also receive medical insurance through the Canadian non prof organization that is much better than US medical insurance.
No taxation in Europe presently as the rules in the particular country are not clear (we have gone to lawyers and tax offices in the past). So far we are not required to pay.
So we only have the US and Canada where we are filing tax returns. in the US we are using the foreign earned income exclusion.
No taxation in Europe presently as the rules in the particular country are not clear (we have gone to lawyers and tax offices in the past). So far we are not required to pay.
So we only have the US and Canada where we are filing tax returns. in the US we are using the foreign earned income exclusion.
OK, I question how you are going about this, any process for you to immigrate would be based on her FUTURE plans, not having pretended to live in Canada, but anyways....
Interest and cap gains attributable to you (under Cdn rules) will be taxed only in US. Dividends will be flat taxed 15%. You may have to send this by check and a letter, not a tax return.
Income attributable to your wife is reportable in both Canada and US.
Any tax she pays (other than on excluded income) and the 15% you pay on Cdn dividends can be used as a tax credit against the US tax you owe on the non-excluded income.
Interest and cap gains attributable to you (under Cdn rules) will be taxed only in US. Dividends will be flat taxed 15%. You may have to send this by check and a letter, not a tax return.
Income attributable to your wife is reportable in both Canada and US.
Any tax she pays (other than on excluded income) and the 15% you pay on Cdn dividends can be used as a tax credit against the US tax you owe on the non-excluded income.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks, Nelson. I have checked with the CRA and my wife is considered a factual resident though she doesn't live most of the time in Canada. Everything is up front and legal. See http://www.cra-arc.gc.ca/E/pub/tg/t4131/t4131-e.html
I am not considered a Canadian resident so presently don't need to file a tax return nor pay any taxes to Canada (until I decide to move to Canada).
So as far as I understand it would be advantageous to keep our accounts separate in order to not complicate the tax situation.
I am not considered a Canadian resident so presently don't need to file a tax return nor pay any taxes to Canada (until I decide to move to Canada).
So as far as I understand it would be advantageous to keep our accounts separate in order to not complicate the tax situation.
CRA will ALWAYS say that a person is a factual resident. That is how they collect tax. I'm saying she does not have to be considered such, if she has a tax home elsewhere. I'm saying I don't see the need to pretend to live in Canada, neither for tax benefits, nor for future immigration.
as to keeping accounts separate, I'm of the opinion that investment accounts should ALWAYS be separate, never joint. So it makes even more sense in this case. But be aware that under Cdn rules, if you fund her account, you are the one who is taxable, and vice versa.
as to keeping accounts separate, I'm of the opinion that investment accounts should ALWAYS be separate, never joint. So it makes even more sense in this case. But be aware that under Cdn rules, if you fund her account, you are the one who is taxable, and vice versa.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
I see. The main reason for her to be considered Canadian is in order to open up bank accounts and brokerages in Canada. It also seems that she needs to be a Canadian resident in order to get medical insurance with the Canadian organization she is working for. The low premiums and no deductible make up for the tax paid on her part time salary. Does this make sense?
About separate accounts... I am not sure I understand. Let's say, that if needed for some reason, my wife would transfer money from her bank account to my bank account. Then I would invest some of that money in a CD or leave it in my savings account where it would gather interest. Are you saying that the IRS would follow that money from one account to another and the investments made with part of the money would then be taxable as my wife's investment?
About separate accounts... I am not sure I understand. Let's say, that if needed for some reason, my wife would transfer money from her bank account to my bank account. Then I would invest some of that money in a CD or leave it in my savings account where it would gather interest. Are you saying that the IRS would follow that money from one account to another and the investments made with part of the money would then be taxable as my wife's investment?
But her medical covergae is based on her maintaining not tax residence, but provincial medical covergae, which she can only legally keep by being physically in canada for at least half the time (5 out of 12 months for Ontario),, so, again, pretending tax residence doesn't maett the qualificiations. And, if hse has asked her provincial healthcare to extend her benefits because she is temporarily out of country, then she doesn't need tax residence. See where I'm going with this? Her Provincial coverage (whcih she needs for her comapny health care ) is not based on tax residence, so be careful that she not commit health insurance fraud.
On separate accounts: reread what I said. Canada (not IRS) attributes the income to the person who funds the account, regardless of name. IRS doesn't care because you are filing joint, but CRA would say the income from your account, funded by her, would be taxable in her name.
On separate accounts: reread what I said. Canada (not IRS) attributes the income to the person who funds the account, regardless of name. IRS doesn't care because you are filing joint, but CRA would say the income from your account, funded by her, would be taxable in her name.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
It is not provincial medical but rather a Canadian medical insurance company covering those overseas. So no fraud involved.
We are about to liquidate my wife's IBond due to the cross border issues. Her Ibond was initially funded by me and my account. This goes with all of "her accounts" in the US. Therefore, using the CRA logic your mentioned, the funds in this account is considered mine according to the CRA.
Is this correct?
We are about to liquidate my wife's IBond due to the cross border issues. Her Ibond was initially funded by me and my account. This goes with all of "her accounts" in the US. Therefore, using the CRA logic your mentioned, the funds in this account is considered mine according to the CRA.
Is this correct?
Yes, but read her policy. It typically covers cdns overseas for short periods, and who maintain their provincial health coverage. That is why it requires them to be Cdn residents.
You are correct on the iBond question.
What cross-border issues are you having?
By the way, most Cdn brokers will not deal with customers that are physically outside canada. How are you getting around this?
You are correct on the iBond question.
What cross-border issues are you having?
By the way, most Cdn brokers will not deal with customers that are physically outside canada. How are you getting around this?
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
I will check out the policy. However, the insurance company is aware of how much time is spent outside of the country.
The cross-border issue is that ibonds are not taxed deferred according to CRA. So no sense in having it in an ibond but I will place it in a CD with my account.
We haven't dealt with a Cdn broker as yet. Our organization has a RRSP with Sunlife Financial. We might need to go with them.
The cross-border issue is that ibonds are not taxed deferred according to CRA. So no sense in having it in an ibond but I will place it in a CD with my account.
We haven't dealt with a Cdn broker as yet. Our organization has a RRSP with Sunlife Financial. We might need to go with them.
So here is a question.
Let's say my wife continues to file Canadian tax returns.
I funded her iBond contribution and also her Roth IRA. Does this mean that it cannot be taxed in Canada due to the fact that I funded it with my own money (my earned salary to my bank account to the respective financial corporation) even though the ibond and Roth is in her name?
Does she even need to declare it in this case?
Let's say my wife continues to file Canadian tax returns.
I funded her iBond contribution and also her Roth IRA. Does this mean that it cannot be taxed in Canada due to the fact that I funded it with my own money (my earned salary to my bank account to the respective financial corporation) even though the ibond and Roth is in her name?
Does she even need to declare it in this case?