US income exemptions in Canada tax return 2013

[czilin]

Hi there,

Just filed 2013 US tax return and is preparing the Canadian return. Need help since I am really dumb in taxing.

Here is my basic info:

- started as TN holder in US in Sep 2013, worked in Canada before that
- filed US 1040NR as advised by accountant
- will file as Canadian resident for 2013 Canada tax return

Here is the data on 1040NR:

37. Amount from line 36 (adjusted gross income): 35,574.

38. Itemized deductions from page 3, Schedule A, line 15: <empty>

39. Subtract line 38 from line 37: 35,574.

40. Exemptions (see instructions): 15,600.

41. Taxable income. Subtract line 40 from line 39. If line 40 is more than line 39, enter -0-: 19,974.

42. Tax (see instructions). Check if any tax is from: 2,550.

43. Alternative minimum tax (see instructions). Attach Form 6251: NONE

44. Add lines 42 and 43: 2,550.

52. Subtract line 51 from line 44. If line 51 is more than line 44, enter -0-: 2,550.


My questions are:

1) is $2550 the tax credit I am going to claim when reporting my US income in Canada tax return?

2) is $35574 or $19974 the total US income I need to report in Canada tax return?

3) if it should be $35574 in 2), then how do I let CRA know the exemptions? If I don't report the exemptions, I am going to be taxed on the full amount $35574? Is that right?

4) does turbotax Canada have a version managing the US income? If not, which tax software is recommended?

Thanks for helping!

[nelsona]

why are you filing as a cdn resident for the whole year. Did you not move to US, or were you commuting back and forth? You should be filing a departure return for Canada, and not report any US income on it.

[czilin]

Thanks for the suggestion. Here are more details of my situation. Please give some insights.

Filing as a Canadian resident is what's advised by the US accountant, who prepared my US NR tax return. He said I should file as a Canadian resident but does not know the details. As I know, I need to file as a resident in one country and non-resident in the other country. Since I lived 8 months in Canada and 4 months in US in 2013, I think I should be considered as a resident of Canada and non-resident of US.

My family members moved to US in mid Dec 2013. I traveled back to Canada during the 2013 Thanksgiving long weekend for 5 days of vacation. Would that affect my tax reporting?

My wife traveled back to Canada in Jan 2014 and resigned his Canadian job at the end of Jan. In her case, she will file a regular 2013 Canadian tax return just like previous years, right? And she will file 2014 Canadian tax return as a departure return?

Our primary Canadian home was just sold last month (Mar 2014). We will report this sale in 2014 Canadian tax return right? And this sale will not be taxed since it's our primary home and was disposed within 1 year of our move, right?

We are now closing most Canadian banking accounts but plan to keep a chequing account and a visa account in the bank where our RRSP/RESP are kept. Is this ok?

If the best option for me is to file a departure return for Canada, which forms should I use? Does TurboTax or other software support this type of turn?

Thanks very much!

[nelsona]

Any reason you did not look for advioce BEFORE doing all this. You became a non-resident of Canada in Sept. The accountant was incorrect to say that you had to file as Cdn resident just because you filed 1040NR (I would ague that you could have filed 1040 for better taxrate but thatis another issue.).

The other problem you have is that regardless if you choose Sep 13, Dec 13, or jan 14, as your departure, you sold your house as a non-resident, and while this results in no tax in Canad (or US, assuming you did not make 500K on the sale), you DID need to file non-residnt compliance forms with the sale or face a small fine.

Can't help you more than this at this time.

[colinc]

I think his house is a huge problem.
http://www.cra-arc.gc.ca/tx/nnrsdnts/cm ... .html#nrcp

- This penalty is $25 a day for each day the notification is late, with a minimum of $100 and a maximum of $2,500
- the purchaser is entitled to withhold 25% (50% on certain types of property) of the proceeds without a "Certificate of Compliance"

In other words without reporting to the CRA for a Certificate of compliance one is subject to a 25% withholding tax on the GROSS (not NET) value of the property and has to pay a penalty.

[nelsona]

Not quite colin. The only liability is the compliance fine. If the buyer did not withhold taxes, that is their problem, not his. The buyer is not "entitled" to withold tax. if he knows the seller is non-resident he MUST withhold taxes. But it is still withhoding tax, ie it is stiull the sellers money, that he would recoup at tax time.

But, in this case, no withhoding was made. That would be the buyers problem.

[czilin]

Thank you very much guys. I admit I am really bad at such things as taxation. I took a look at those CRA rules and forms, and I have to say I am still a bit confused. It looks like I need to send CRA the compliance request within 10 days of disposition, so let me send them the request today anyway - hopefully they can forgive the delay of a few days (the transaction was closed at the end of March).

Which form should I use? It's our primary (actually only) real estate property in Canada. It seems to be T2062A, but in the supporting docs, it says also include T2062. So both forms are needed?

Since the home was co-owned with my wife, we need to submit 2 sets of forms, right?

Any we need to attach the transaction docs from the lawyer handling the case right?

I know you might think "why don't you read the cra guides"; but guys, those tax guides are like books from another world to me. Sorry to bug you. Thanks very much.

[czilin]

Need more help with form T2062A:

Details of property: do I choose “Depreciable propertyâ€￾ or “Real property (other than capital property)â€￾

Amount to put in (1)-(4):
- (1) Proceeds of disposition or capital cost:
- (2) Undepreciated capital cost or cost amount:
- (3) (1) – (2)
- (4) Excemptions:

Details of the sale; here is the re-direction of funds from lawyer: (btw, we bought in 2010 for $350,000)
- Lawyer fees: 1500
- Mortgage discharge: 320,000
- Brokerage commission: 18,500
- Paid to seller: 80,000
- ---------------------
- Total: 420,000

So what numbers should go to (1), (2), and (4)?

Thanks.