I moved from Canada to USA on March 19, 2006. Unfortunately I did not know that I have to report to the bank (savings account) that I am a non-resident of Canada anymore. So I received T5 form for the whole year instead of T5 + NR4.
Is it mandatory to fix the issue ? I figured out that in case of NR4 the tax is 10 %, but in case of T5 it is about 21%. So if I report T5 for the whole year, I will pay more taxes. But the difference is only about 15 CAD - so I agree to pay that. May I report T5 (as it is) and forget about the issue ? If not, how should I fix it ? Do I need to call the bank (isn't it too late ? ) or CCRA ?
May I use T5 instead of NR4
Moderator: Mark T Serbinski CA CPA
No. Since you left in march, you are NOT supposed to report interst on your tax return from after march 19. Did you read the Emigrants guide?
You must tell your bank that you are non-resident. It will take effect now. You must tell anyone who might pay you from Canada (bank, RRSP, renters, etc)
You must then send a letter explining with a check for 10% of the interest you received after 03/19/2006.
Don't forget to inclue your CDn intesrt on your US return, and to report all your forein accounts on TD... form.
You must tell your bank that you are non-resident. It will take effect now. You must tell anyone who might pay you from Canada (bank, RRSP, renters, etc)
You must then send a letter explining with a check for 10% of the interest you received after 03/19/2006.
Don't forget to inclue your CDn intesrt on your US return, and to report all your forein accounts on TD... form.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Re: May I use T5 instead of NR4
Well, technically, Nelson is correct. Practically though, Canada will not object to you including the extra interest on your emigration return if you end up paying a rate of tax higher than 10%. Given the amount of income you are talking about, it is clearly not worth the hassle of trying to split the income on the T5, attaching a note to CRA explaining what you did and why, etc. It will just cause questions and extra hassle for everybody.
You must definately though inform the bank of your foreign status, if the account still exists.
You must definately though inform the bank of your foreign status, if the account still exists.
Why would writing a letter not be worth $15? You have to mail your return in anyc ase. It will not open any questions, as this is the cortrect procedure to follow.
Besides, to correctly claim foreign tax credits on his 1040, he can only claim the 10% he legally owes.
Carson, what would be your threshold for filing correctly. :wink:
Besides, to correctly claim foreign tax credits on his 1040, he can only claim the 10% he legally owes.
Carson, what would be your threshold for filing correctly. :wink:
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
[quote="nelsona"]Why would writing a letter not be worth $15? You have to mail your return in anyc ase. It will not open any questions, as this is the cortrect procedure to follow.
Besides, to correctly claim foreign tax credits on his 1040, he can only claim the 10% he legally owes.
Carson, what would be your threshold for filing correctly. :wink:[/quote]
LOL - well, as I said, you are technically correct of course. But my recent mounting negative experiences with CRA leads me to keep it simple so we don;t invite them to screw it up. You would not believe the errors that have come through the International Tax Office over the last few years. They are having trouble calculating foreign tax credits under the Treaty now for US citizens living in Canada. Incompetent bumblers!
I can just envision that the filing of his return with the "adjusted" T5 interest amount could very well lead to a reassessment and another round of explaining it to them.
Shhhhhh....but we employ these "shortcuts" from time to time for non-material amounts like this and we can ensure the tax folks each get their proper tax. Certainly part of it is because it's very difficult to bill a client for the time required to fix this kind of client error exactly. But we certainly do the exact procedure you recommend several times a year.
Besides, to correctly claim foreign tax credits on his 1040, he can only claim the 10% he legally owes.
Carson, what would be your threshold for filing correctly. :wink:[/quote]
LOL - well, as I said, you are technically correct of course. But my recent mounting negative experiences with CRA leads me to keep it simple so we don;t invite them to screw it up. You would not believe the errors that have come through the International Tax Office over the last few years. They are having trouble calculating foreign tax credits under the Treaty now for US citizens living in Canada. Incompetent bumblers!
I can just envision that the filing of his return with the "adjusted" T5 interest amount could very well lead to a reassessment and another round of explaining it to them.
Shhhhhh....but we employ these "shortcuts" from time to time for non-material amounts like this and we can ensure the tax folks each get their proper tax. Certainly part of it is because it's very difficult to bill a client for the time required to fix this kind of client error exactly. But we certainly do the exact procedure you recommend several times a year.