Canadian permanent resident commuter to US

dvornik · Post by **dvornik** » Fri Feb 09, 2007 10:52 am

Canadian permanent resident (PR) not Canadian citizen, working in US (H1), commuting daily. Has wife - Can permanent resident working in Canada. Two kids - one US citizen and Canadian PR, second - Canadian PR. Was living in US for six years and moved to Canada in May 2006. Have active rented property in Michigan.
One child (US citizen) goes to day care. Wife attends college in Windsor.
Do we do everything correct?
1) For 2006 filling 1040 MFJ. Providing wife's Canadian income. Can we exclude her wages by 2555, even if we are not US/Can citizens
2) Can we credit child care expenses after moving to Canada (Canadian public child care organization)
3) Can we deduct donations made to Can charities?
4) Rental property - we depreciate it in US and subtracting a net loss from gross income. Same thing we'll do for Canadian taxes.

Thank you!

nelsona · Post by **nelsona** » Fri Feb 09, 2007 11:55 am

1) Yes. The fact that you and she are residents of canada is sufficient.
2) You would need to look at teh child care expense rules. I seem to recall the need to provicde an SSN for the payee, which could be a problem. I believe others in your situation are claiming however with no problem.
3). Only to the extent that you report (and do not exclude) Cdn source income. You can usually claim upto 30% or 50% of such income in charitable gifts. Rememebr that you are not looking to reduce your US tax too aggressively, since it will simply be made up in Ontario tax.
4). You must fololw the depreciation/renatal income rules in US, which are likely different than what you are doing in canada.

dvornik · Post by **dvornik** » Tue Feb 13, 2007 9:45 am

Thank you Nelsona!
What about Michigan state income taxes? Can I file it as resident or not?

nelsona · Post by **nelsona** » Tue Feb 13, 2007 2:10 pm

You have to look at the Michigan rules yourself.

dvornik · Post by **dvornik** » Wed Feb 14, 2007 12:17 pm

Thank you so much! I have two more questions:
1. I immigrated to Canada in May 2006. Do you know if I have any RRSP room?
2. With 1040 federal/state refund I get, I assume I have to subtract that amount from Foreign Tax Credit in T1. Am I right?

nelsona · Post by **nelsona** » Wed Feb 14, 2007 12:35 pm

1. You would only have RRSP contribution room if you had reported wages on your 2005 return, so, no.

You may contribute now for 2007 if you wish, claiming the deduction in spring 2008.

2. The foreign tax credit for your T1 is based on the final fed and state tax that you pay, not what was withheld during the year. You will submit your 1040 with your Cdn return.

dvornik · Post by **dvornik** » Wed Feb 14, 2007 1:01 pm

And the $2000 over contribution limit amount is not tax deductible. Am I right?
Thank you!

nelsona · Post by **nelsona** » Wed Feb 14, 2007 1:57 pm

No, it is not deductible. besides, since it is now 2007, it is impossible for you to overcontribute for 2006.

If you are saying that you contributed to an RRSP in 2006, then you must be sure that it was less than $2000, or you will be penalized.

dvornik · Post by **dvornik** » Mon Apr 16, 2007 2:42 pm

[quote="nelsona"]
4). You must fololw the depreciation/renatal income rules in US, which are likely different than what you are doing in canada.[/quote]

Another topic made me think again about depreciation.
We have rental property in Michigan and if we depreciate it we have loss around $2,000.
We are actively involved renting (collect rent, maintaining etc)
Even if we depreciate it in Canada we can't get below 0. Is there a way to count that loss on income we report in Canada?
Thank you!

nelsona · Post by **nelsona** » Mon Apr 16, 2007 3:03 pm

Not that I know of.