interest income

TOMN · Post by **TOMN** » Fri Apr 10, 2009 8:34 am

Canadian living/working in US with green card . I know what needs to be done on US tax return but I need help with Canadian return. I had no Canadian work income in 2008 but received T5 interest statement from my savings account (I changed the residency with my bank but it was too late for the interest statement). Do I file non-resident T1 with schedule 4? Does 5th protocol have any impact? Thanks.

nelsona · Post by **nelsona** » Fri Apr 10, 2009 9:38 am

Canada stopped withholding interst on non-residents in 2008, so any interst you earned in canada after you became non-resident is not taxable in canada (it was never reportable by non-residents on a tax return in any event before either: it was subject to flat tax).

Did you file a departure return for canada?

TOMN · Post by **TOMN** » Fri Apr 10, 2009 9:43 am

Yes, I did file a departure tax return for 2007 tax year. Just to make sure I don't need to file anything with Canada and I don't need to pay any taxes to them even though I received Canadian source interest income? I convert it to US dollars and report on 1040, right? Thanks for your help.

nelsona · Post by **nelsona** » Fri Apr 10, 2009 9:55 am

Correct

nelsona · Post by **nelsona** » Fri Apr 10, 2009 9:55 am

Make sure all your other Cdn accounts are known to be non-resident

TOMN · Post by **TOMN** » Fri Apr 10, 2009 10:06 am

Thanks. I marked all my cdn accounts as non-resident in August'08 even though I departed early 2007. Is it OK?

TOMN · Post by **TOMN** » Fri Apr 10, 2009 10:14 am

one other question, since I don't file cdn return for 2008, I won't be able to carry forward a portion of my foreign tax credit that was unused in 2007 due to income limitations, correct?

nelsona · Post by **nelsona** » Fri Apr 10, 2009 10:41 am

Which foreign income credits are you talking about? if you are taliking aboiut carryforwards from your 1116 (cdn tax that you claimed on 1116), you can carryforward regardless on what you file in canada.

If you are talking about US tax that you claimed on your Cdn return, you couldn't carry them forward to a future year regardless of whether you file or not.

TOMN · Post by **TOMN** » Fri Apr 10, 2009 11:23 am

Sorry for not being clear. My question was about form 1116 on the US tax return. It was my understanding that I can only carry forward in the years that I have some canadian income (passive or active) and pay taxes to Canada. If I don't need to pay anything to Canada, then I can't carry forward this (2008) year? Thanks.

nelsona · Post by **nelsona** » Fri Apr 10, 2009 5:20 pm

You can carry forward regardless. Your info is wrong.

nelsona · Post by **nelsona** » Fri Apr 10, 2009 6:44 pm

In fact for 2008, you should be reporting your interest on an 1116, and drawing down on your 2007 carryforward.