Canadian Tax Questions

RobertCA · Post by **RobertCA** » Mon May 02, 2005 4:30 am

I am a Canadian Citizen left Canada last year Feb to US working Under TN. My wife and daughter are with me until now. We don't have a house in Canada, but have all our furniture and belongs storages during year 2004 in Canada, and my wife took a leave of absence from her job in Canada and she could go back anytime she wants. We still have our Canadian bank accounts and credit cards. So far, I think, after reading CCRA's website, we are kind of non-resident for year 2004. We have not filed departure return yet, which tax package should we use? And, how to calculate net foreign non-business income? In my case, I have W2s, so my net foreign non-business income would be my gross income subtract all the tax withheld? And how to calculate my foreign tax credit? I am confused, please help!

nelsona · Post by **nelsona** » Mon May 02, 2005 7:27 am

FRom what you say, you and your family are non-residents of Canad since Feb 2004, if they all came with you at that time (and stayed in US).

You should be filing a normal Cdn return for 2000, but with a deaprture date of Feb on page 1.

You should follow the insructions of the Emigrants' guide from CRA.

As such, you will not be reprting ANY US income in Canada, so no need to worry about foreign income.

But, if you were remaining Cdn resident, the calculation of foreign wages is quite simple: whatever W2 say is your wagesm PLUS any 401(K) contribution ou made, converted to Cdn $. This would be included in your employment income for the year, and then also as foreign income.

nelsona non grata... and non pro

RobertCA · Post by **RobertCA** » Mon May 02, 2005 12:36 pm

Thanks, Nelson. One more question, my wife sold her non-RRSP mutual funds after we left, and there are some capital gains for year 2004, How she report this?

nelsona · Post by **nelsona** » Mon May 02, 2005 3:54 pm

As you know, any thing she owned the day she left is deemed to have been sold (for Cdn tax purposes) that day.

Any sales after that date are taxed in US only, based either on the original cost basis, or the deemed cost basis, whichever is highest.

nelsona non grata... and non pro

RobertCA · Post by **RobertCA** » Mon May 02, 2005 5:17 pm

So far, my wife has T5 from her fund companies which still use our Canadian old address. Does she need to ask her fund companies to issue other receipts for her US return?

RobertCA · Post by **RobertCA** » Mon May 02, 2005 5:33 pm

Sorry, another question. I know there are withholding taxes on interest income from Caada for non-resident of Canada. In my wife's case, she should contact with her fund companies about her non-resident status and withhold taxes on those funds she sold which they did not withhold any taxes on the gains last year when she sold them, right?

nelsona · Post by **nelsona** » Tue May 03, 2005 9:27 am

Your wife should declare her non-res status to her broker.

They will not re-issue any 2004 slips as the address does not matter

There will be no withholding on cap gains, since these are not subject to either withholding nor taxation in canada for US residents.

For any interest/dividends that she received as a non-resident, she should send a note and a check to CRA expalining the oversight and paying the proper NR tax for those incomes.

In the future, the brokewr will deduct ant NR tax right away, and that will be the end of any Cdn tax responsibility.

nelsona non grata... and non pro

RobertCA · Post by **RobertCA** » Tue May 03, 2005 2:29 pm

I already filed my US return married joinly in March and still have not heard from IRS yet. So now, which form should I use to report my wife's Canadian capital gains?

nelsona · Post by **nelsona** » Tue May 03, 2005 2:43 pm

You would need 1040-X to ammend your return, schedule D to report capital gains, and an Form 8833 treaty-based position to allow one to use the 'deemed value' as the cost basis (if that is indeed the choice you make), referencing the US/Canada agreement of Sep 18 2000.

What are you waiting to hear from IRS about? The IRS does not send assessments like CRA. Unless there was a major error, They simply either cash your check, or send you a refund -- that's it.

nelsona non grata... and non pro

RobertCA · Post by **RobertCA** » Tue May 03, 2005 2:58 pm

Oh.. this is my first time filing US tax, so don't know much about it. Well, I needed to send my return to Philly first to get the International Tax IDs for my wife and daughter. It has been 5 weeks now, we still have not received any ID from them. Actually, We applied AOS from TN to Green Card, We already recived our EAD cards and my wife and daughter already applied their SSN and received them last week. Should they give IRS their SSN now or wait for their International Tax ID?

nelsona · Post by **nelsona** » Wed May 04, 2005 6:55 am

I would wait until everything is sorted out for the 2004 return, and then send them a letter clearly making the connection between their ITIN 'IRS Tax ID Number' (it's not 'international') and their SSNs.

Use SSNs on next yers return.

P.s. Just out of curiosity, what conditions allowed you to submit I-485 so quickly? Most of us have had to go thru YEARS of Labour Certification before submitting I-140/I-485. I got to do FOUR tax returns before getting to switch my spouse to SSN. Are you EB1 or NIW?

nelsona non grata... and non pro

RobertCA · Post by **RobertCA** » Wed May 04, 2005 4:55 pm

I am a RN, don't need to apply for LC. Actually, I am shock that we got our EAD so fast too. IT IS A GOOD THING!