Canadian with US bank account (Small interest taxable?)

BaelishX · Post by **BaelishX** » Sat Jan 05, 2013 7:26 pm

I'm a Canadian with a lot of US funds. I have no US tax obligations and don't fill out a US return. I don't want to have to.

Soon I'll be opening a TD US bank chequing account and transferring some funds to it. The account I'm looking at earns at small amount of interest. 0.05% APR. I'd only be putting about $3000 in it. So there would be very little interest generated.

But I'm worried even one cent would give me US tax obligation and I'd be better off with a no-interest account to avoid the hassle.

Any advice would be much appreciated, thanks.

JGCA · Post by **JGCA** » Sun Jan 06, 2013 3:00 pm

Many Canadians have US bank accounts and earn interest as long as you report the interest to Canada you have no further obligations to the US.

nelsona · Post by **nelsona** » Mon Jan 07, 2013 10:47 am

US Bank interest is not taxable for US non-residents. Period.

lanman2000 · Post by **lanman2000** » Wed Jan 23, 2013 4:09 pm

[quote="nelsona"]US Bank interest is not taxable for US non-residents. Period.[/quote]

What if the US non-resident is a US Citizen though? Or are you thinking that that is just resourced to Canada anyways using 1116 and the treaty?

nelsona · Post by **nelsona** » Wed Jan 23, 2013 8:53 pm

US bank interest is taxable for US citizens. As you hinted, canada will not grant any tax credit, so your use a re-source 1116 to zero out the US tax.

JGCA · Post by **JGCA** » Mon Feb 11, 2013 3:33 pm

Nelson can you tell me what is the witholding tax on US treasury Bond interest held by a non resident of Canada and what tax credit is given on the T1 and is it taxable to the non resident on a 1040NR or is it like bank interest non taxable to a non resident. Thanks

nelsona · Post by **nelsona** » Tue Feb 12, 2013 6:50 am

A "non-resident of canada"? You mean a US resident? Please clarify,

JGCA · Post by **JGCA** » Tue Feb 12, 2013 9:55 am

Sorry, I meant a non resident of US living in Canada who formerly resided in US now back is not a USC or GC holder.

nelsona · Post by **nelsona** » Tue Feb 12, 2013 2:39 pm

Well, as a US citizen, he would never be subject to withholding. Even Non-USC Cdns would not be taxed in US, since by treaty, US Govt Interst is not taxable by US (Article XI(3)).

So, interst would be reported on both Cdn nd US returns, no tax credit given by Canada, and re-sourcing rules would nbeed to be applied to relieve any US tax, on form 1116

nelsona · Post by **nelsona** » Tue Feb 12, 2013 2:40 pm

sorry..
USC:
Interest would be reported on both Cdn nd US returns, no tax credit given by Canada, and re-sourcing rules would nbeed to be applied to relieve any US tax, on form 1116

Non USC:
Interst would be reported on both Cdn return, no tax credit given by Canada since no US tax arising.

JGCA · Post by **JGCA** » Tue Feb 12, 2013 7:50 pm

I got it , thanks