Non-resident Canadians living in the USA - Taxes

[Fobulous]

Morning all,

I know there are a few Canadians living here in the USA and wanted to ask for some help.

I became a non-resident of Canada in 2011. Filed my taxes in both Canada and the USA in 2012 through PwC.

Now here we are in 2013. I no longer need to do my taxes in Canada but am on my own for the USA taxes.

My US taxes should be straight forward except that my wife has a T4E from Canada (Maternity leave that stretched into 2012) and I have one T5 slip from Canada.

Does anyone know how I should treat these? Is there a box on US taxes for foreign income/dividends?

I am ultimately going to do my taxes through an accountant but just want to understand this for my own peace of mind.

Any help would be greatly appreciated!

-FoB.

[Kavvy]

Originally Posted by Fobulous

Morning all,

I know there are a few Canadians living here in the USA and wanted to ask for some help.

I became a non-resident of Canada in 2011. Filed my taxes in both Canada and the USA in 2012 through PwC.

Now here we are in 2013. I no longer need to do my taxes in Canada but am on my own for the USA taxes.

My US taxes should be straight forward except that my wife has a T4E from Canada (Maternity leave that stretched into 2012) and I have one T5 slip from Canada.

Does anyone know how I should treat these? Is there a box on US taxes for foreign income/dividends?

I am ultimately going to do my taxes through an accountant but just want to understand this for my own peace of mind.

Any help would be greatly appreciated!

-FoB.

Sorry, no help to you as I have no idea, but my own question - Is the American tax code as convoluted and confusing as everyone says it is when compared to the Canadian version? Or is that a load of cr@p?

[Senator Clay Davis]

Hmmm, not sure why you'd pay taxes in Canada in 2012 if you became a non-resident in 2011. Otherwise I would guess there's a section in a US income tax return for foreign source income, as it is in the Canadian tax returns. Not 100% sure since I've never dealt with a US return, but I'd imagine they would.

[Fobulous]

Originally Posted by Kavy

Sorry, no help to you as I have no idea, but my own question - Is the American tax code as convoluted and confusing as everyone says it is when compared to the Canadian version? Or is that a load of cr@p?

US taxes are definitely as convoluted and confusing just like everyone says.

I find Canadian taxes to be very straight forward and all about numbers as it should be.

With US taxes it is all about self disclosing and being up front about stuff. I feel like you need to be a lawyer or a very well versed accountant to understand all this crap!

[Fobulous]

Originally Posted by Senator Clay Davis

Hmmm, not sure why you'd pay taxes in Canada in 2012 if you became a non-resident in 2011. Otherwise I would guess there's a section in a US income tax return for foreign source income, as it is in the Canadian tax returns. Not 100% sure since I've never dealt with a US return, but I'd imagine they would.

I definitely don't think I need to pay taxes in Canada, but I am just trying to understand how it works paying taxes down here on foreign income.

I am thinking I might pick up turbo tax this weekend and have a go at it myself before I try and get an accountant to do it for me.

[valo403]

Originally Posted by Fobulous

US taxes are definitely as convoluted and confusing just like everyone says.

I find Canadian taxes to be very straight forward and all about numbers as it should be.

With US taxes it is all about self disclosing and being up front about stuff. I feel like you need to be a tax lawyer or a very well versed accountant to understand all this crap!

Added the bolded portion to your post, as I'm a US trained lawyer and have absolutely no idea what is going on in the tax code. I live in constant fear of the IRS, despite filing what I think are proper returns every year. It's incredibly complicated stuff.

[Phanuthier]

Are you using Turbotax? I was/still am hacking through my taxes and I remember a section that asked for foreign income in one of the steps. If you aren't using it, it seems to be the laymans solution to taxes that aren't too convoluted; if you can't find it, msg me and I'll take a look some time this week to find out which section it is. (I can also look at my previous years' filing's when I did have CND income on my US taxes)

[Fobulous]

Originally Posted by Phanuthier

Are you using Turbotax? I was/still am hacking through my taxes and I remember a section that asked for foreign income in one of the steps. If you aren't using it, it seems to be the laymans solution to taxes that aren't too convoluted; if you can't find it, msg me and I'll take a look some time this week to find out which section it is. (I can also look at my previous years' filing's when I did have CND income on my US taxes)

That would be awesome if you could take a look at previous years taxes. Would definitely help me out if you could.

[puckhog]

I definitely don't think I need to pay taxes in Canada, but I am just trying to understand how it works paying taxes down here on foreign income.

As a non-resident you still have to pay taxes on income from a Canadian source, including Canadian investment income. But, the person paying you is bound to withhold and pay 25% as a non-resident tax, so you shouldn't have to file anything in Canada. Is there anything on the T5 that indicates if the tax was withheld?

Also, as far as I know, as a US resident, you are now taxable on your worldwide income, so the amount will have to be included in your income. There may be an offsetting credit that you can use for the tax that should have been paid in Canada.

Not sure if this was helpful or not.

[Locke]

Originally Posted by puckhog

As a non-resident you still have to pay taxes on income from a Canadian source, including Canadian investment income. But, the person paying you is bound to withhold and pay 25% as a non-resident tax, so you shouldn't have to file anything in Canada. Is there anything on the T5 that indicates if the tax was withheld?

Also, as far as I know, as a US resident, you are now taxable on your worldwide income, so the amount will have to be included in your income. There may be an offsetting credit that you can use for the tax that should have been paid in Canada.

Not sure if this was helpful or not.

This is true. Even as a non-resident you have to pay tax on Canadian-Sourced Income. It just means that you dont have to file a Canadian tax return for your American income.

[mrkajz44]

The issue with "sourced" income depends on the type of income.

Dividend income is typically sourced based on where the dividends were paid from. Therefore, if the company is US based, then the dividends are considered US source.

Interest income is different and usually based on your residency, rather than where the interest was paid. So if you were a resident in the US in the entire year, all interest income should be sourced to the US.

The tax treaty have have changed since I did US personal taxes in 2009 though, but that's what I remember.

And yes, the US tax system is way more complicated, both personal and corporate. Just compare the size of the Canadian act and regulations (one book) and the US code and regulations (typcially 6-8 books).