FAQ

Please refer to the “Services” page for the answer.

It depends on your tax situation.

No. The sooner we get your basic information the better. We can create your tax profile by completing a tax interview with you.

You can rollover (direct roll over) your IRA to your RRSP. if you wish to roll your U.S. retirement plan into a Canadian RRSP account you have to be really careful. Generally, if the employer contributed to a U.S. retirement plan while the employee was a resident of the U.S., a rollover into a Canadian RRSP would be possible without affecting the RRSP contribution room. However, if an employer contributed to the plan while the employee was a resident in Canada, the employee would not be allowed to roll the plan into an RRSP account on a tax-free basis. The lump-sum payment of the retirement plan would be included in taxable income for the year; however, it may be possible to shelter part of the transfer if there is available RRSP contribution room.

There are no provisions in the U.S. that allow a rollover of RRSP to an equivalent Individual Retirement Account (IRA).

You have to meet all of the following conditions to be able to deduct your truck expenses:

You were normally required to work away from your employer’s place of business or in different places. Under your contract of employment, you had to pay your own motor vehicle expenses You did not receive a non-taxable allowance for motor vehicle expenses. And your employer has to complete and sign CRA Form 2200 (declaration of Employment, and the employer has to answer “yes” to questions 1 &2).

The types of expenses you can deduct include:

• - Fuel Maintenance and repairs
• - Insurance License and registration fees
• - Capital cost allowance
• - The interest you paid on a loan used to buy the car
• - Eligible leasing costs.

Since you use your car for both employment and personal use, you can deduct only the percentage of expenses related to earning income. To support the amount you can deduct, keep a record of both the total kilometers you drove and the kilometers you drove to earn employment income. Please note that the CRA considers driving back and forth between home and work as personal use.

Roth IRA is similar to TFSA (Tax Free Saving Accounts) in Canada.

Roth IRA is non-taxable in Canada. According to the Canada – U.S. Tax Treaty, Roth IRA will lose its “pension” status should a Canadian resident make any contributions to it; the only exception to this rule is if the payment is a rollover contribution from another Roth IRA. If any other contributions are made, the resulting growth from the time of the contributions will be subject to Canadian income tax in the year of accrual.

Yes, after the Supreme Court issued the Windsor decision, the common law partners now can file jointly for U.S tax purposes.

You contributed 100 per cent of the funds to acquire the property and that both you and your husband took title to the property as joint tenants.

When the property is sold the U.S. will attribute 50 per cent of the gain to the husband and 50 per cent of the gain to the wife (US does not have spousal attribution rules). For Canadian purposes, the results may be quite different. CRA could argue that since the wife has contributed 100 per cent of the funds to purchase the property she should be taxed on 100 per cent of the gain. If this is the result, the U.S. tax paid by the wife, if any, could be forever lost for Canadian tax purposes.

Under the following two conditions, you would be able to get a refund:

The tax was withheld from winning from blackjack, baccarat, craps, roulette or big-6 wheel; You also had US gambling losses. Under Canada-USA Tax treaty, losses incurred on wagering transactions of Canadian residents, the gains of which would be subject to the 30% withholding tax, shall be deductible to the same extent that losses would be deductible if they were incurred by a U.S. resident. So it means the gambling losses can be used to offset some or all of the gambling winnings for the same year, but you have to keep a good record for your gambling losses.

Correct, LLC is a best choice for a US citizen not for Canadian as we do not have a similar structure in Canada.

So Canada treats a LLC as a corporation. A US C-Corp- there are good side and bad side to the C-corp. Good side is the estate taxes as the corporation never dies if the owner dies. Bad side: if you sell the property and your property appreciated in value then the capital gain will be taxed at 35% tax rate for a corporation; while as an individuals the tax rates that apply to net capital gains will usually depend on the individuals tax bracket (for 2014 up to $36,900 of gain for a single taxpayer is exempt). Although the maximum net capital gain tax rate rose from 15 to 20 percent in 2013, a zero or 15 percent rate continues to apply to most taxpayers. I cannot cover all issues here if you need more info please contact me.

There has been changes in tangible regulations which may affect you as you are holding a US real estate. While the acquisition rules are substantially the same, changes were made to clarify certain provisions. These new regulations surrounding repairs & maintenance, supplies and materials, depreciation, improvement and dispositions of tangible property. The new regulations provide taxpayer favorable safe harbors, elections and other modifications intended to simplify and add flexibility in their application.

Elections or additional forms (IRS Form 3115) may need to be filed with your 2014 tax return. These form and elections are MANDATORY in 2014 and going forward.

Because you owned a rental property prior to 2014 and claimed current and previous years repairs and depreciation. It tells me that you need to review all previous years depreciation and repair/maintenance expenses and may need to make adjustments under the new regulations. Please contact my office for further assistant. 2015/02/10

Update: 2015/02/13-This afternoon, the IRS released new rules related to filing Form 3115. Although I am still analyzing the full extent of this IRS release, it appears that the intent of the IRS pronouncement is to provide relief to small taxpayers from the burden of filing the 3115.

01/15/2018.

There are two ways to take distributions from 401K (if your plan allows you, please contact the financial institution to find out): a loan; or a hardship distribution.

If your plan allows you to take a loan, then you can take a loan to avoid any taxes or penalties; You can take a loan amount equal to the lesser of half your account value, or $50,000; the loan repayment period is 5 years and you have to pay it back monthly. If your plan allows you for hardship distributions, then you have to pay tax plus a 10% penalty (if you are under 59.5 years of age). My first suggestion would be that you take a loan from your 401(k), because it is a non-taxable event. The least favorable suggestion is taking a distribution under the IRS’s hardship rules, if your plan allows it. This distribution would be fully taxable and there is a penalty of 10%.

06/03/2015-Yes, there are two educations credits that can help you with the cost of higher education. You may be able to claim up to $2,500 as American Opportunity Tax Credit. The credit applies to the first 4 years of an eligible school. Also, 40% of the credit (up to $1,000) is refundable. This means you can get it even if you owe no tax. Please contact my office to discuss them further.

2018-01-16-US Form W9 is for a US resident/citizen; for Canadian you have to provide W8BEN. Part 1 of Form W8BEN is your personal information; on Part 2 Q9 you have to write “Canada” and on Q10 you have to provide treaty Article number, which in your case is “Article VII” and if you do not have a fixed base regularly available to you in the U.S., the income is taxable in Canada only, but you have to file a US Tax Return, IRS Form 1040NR along with Form 8833 (treaty based tax return) to let the IRS knows why your income is not taxable in the U.S..

2015-03-09-Deductible travel expenses include the following: Cost of traveling by airplane, train, bus or car from a home to a business destination. The cost of lodging Half the cost of meals While the cost of airfare to travel for business does qualify as a tax deduction, the IRS does not allow business travelers to take a deduction if they use frequent flier miles or similar program to travel. So there is no tax deductible expense when using frequent flier miles. Since tickets purchased with frequent flier miles are not tax deductible, you should paid for your tickets and save frequent flier miles for personal travel.

2018-02-12-CRA position on US LLPs and LLLPs formed after April 25, 2017, will be treated as corporations for Canadian tax purposes, so no LLP or LLLP, the only option is LP.

October 24, 2018- The situation you described requires a consultation and cannot be answered through a simple email. However to generally answer your question; based on the Income Tax Act, the company must meet a number of conditions in order for its shares to qualify to be held within a RRSP as follow: the investment qualify as being eligible to be held within a RRSP; means you or any investor cannot hold 10% or more of any class of shares issued by the private company; if you own more than 10% of the corporation shares, you will be considered to have a significant interest in the corporation and this immediately makes the investment a prohibited investment and not a qualified investment for the RRSP. company must meet certain tests: the company must be incorporated in Canada; and the vast majority of the company’s assets (generally 90% or more based on fair market value) must be used in an active business carriedon primarily in Canada.

Feb. 1, 2019- Transferring your father condo to you will trigger capital gains for your father. Your father will be deemed to have sold the property on the date of transfer at the fair market value (FMV) of the property and this will result in a capital gain to him. He would be liable for any accrued gain up to the time of transfer. The only way your father would be able to not pay tax on the accrued capital gain at the time of transfer, is to designate it as his principal resident. If the condo was your father principal resident for each year he owned it, the transfer will be tax-exempt and he does not pay tax on the gain under principal resident exemption. The FMV, at the time of transfer, will be the deemed cost of the property to you; appreciation from the day of the transfer is taxable in your hands. If you live in the condo as your principal residence then you will be exempt from paying capital gains when you sell the condo.

Your cousin is correct about the annual gift exclusion, which allows individuals to gift up to $17,000 (not $35,000) per person per year in 2023 (for 2024 the exclusion limit is $18,000) without incurring a gift tax. For a couple, this means your cousin could gift you & your partner a total of $34,000 in 2023 & $36,000 in 2024 without triggering the gift tax. In addition, if your cousin transfer the fund directly to your U.S. accounts, it is crucial to be aware of any potential tax implications in the U.S. . Gifts are generally not considered taxable income for the recipient, but reporting requirements may apply, if the gift is more than the exclusion limit for the year. 

Tax implication in Canada: In Canada, gifts are generally not subject to income tax. However, if there is any income generated from the gifted funds (e.g., interest or investments), that income could be taxable.If your cousin plans to gift any additional amounts in 2024, it is essential to factor in any changes in tax laws and seek advice closer to that time. 

Please always consult with tax professionals to ensure compliance with both U.S. & Canadian tax regulations and to optimize your financial strategy.  

Before proceeding with the rollover, it is crucial to understand the specific terms of both your IRA & 403(b) plans and consider the long term implications for your retirement strategy. 

The rollover itself from a traditional IRA to a 403(b) is generally not a taxable event. As long as the funds move directly from the IRA to the 403(b) through a direct rollover, there should be no immediate tax consequences. Both traditional IRAs and 403(b) accounts are typically pre-tax accounts. The funds in the traditional IRA have not been taxed yet, and they will continue to grow tax-deferred within the 403(b). 

Check Plan Eligibility: Ensure that the financial intuition holding your IRA allows incoming rollovers into the 403(b) plan. Different plans may have specific rules regarding rollovers.  

As an American who reside in Canada, you are allowed to participate in U.S. 529 plans, which are tax advanced savings plans designed to encourage saving for future education costs. 

Please note that 529 plans are offered by individual U.S. states, and each state may have its own rules and features. It is crucial to select a plan that aliens with your needs and preferences. 

While contributions to a 529 plan are not deductible for federal tax purposes, they may offer state tax benefits in the U.S.. However, as a Canadian resident, you won’t be eligible for these state tax benefits. 

If you need personalized advice based on your specific circumstances, please contact my office. Moreover, keep in mind that regulations and policies may change, so it is essential to verify the current rules and seek professional advice. 

The Canadian Physician Retention Program (CPRSP) is a provincial program designed to attract and retain physicians in specific regions of Canada. Since the program can vary by province, it's important to consider the details of the specific CPRSP offered to you. The CPRSP currently has two components: a Basic benefit and a Length of Service (LOS) benefit. You will receive a T4A for the applicable benefits (which has to be included in your tax return in both countries; however you can deduct a foreign tax credit in the USA to pay tax to one country) , you can contribute to your RRSP/TFSA to reduce your Canadian taxes on the benefit; please note that you cannot deposit the benefit directly to your TFSA/RRSP. Make sure to contribute to your RRSP/TFSA prior to, or immediately after, submitting your online claim and receiving the benefit.  

There are two kinds of owners: 1. affected owners 2. Excluded owners. you are not an affected owner as you are a Canadian Citizen and you own the property individually, you do not need to file UHT tax (residency are not mentioned on the UHT affected owner criteria but the focus is being a Canadian citizen or a PR holder not a Canadian resident).  

UHT tax is 1% tax on the fair market value of the property. There are two kinds of owners: 1. affected owners 2. Excluded owners. 

If your corporation has a share capital, then you are not an affected owner, but if it does not, then you are affected owner.

The term “share capital” refers to the amount of money the owners of a company have invested in the business as represented by common and/or preferred shares. If you need more discussion in this regard, please contact my office. 

If you believe the UHT filing may apply to you, it is better to err on the side of caution and we recommend you file the UHT return. The return must be received by CRA before April 30 to ensure you are not subject to these large penalties.

The FBAR does not have any exception for minor children, if your daughter has ownership over a foreign account, then she has to file her own FBAR each year to report the accounts if she has over USD$10K. 

Generally, a child is responsible for filing his or her own FBAR report. If a child cannot file his or her own FBAR for any reason, such as age, the child's parent, guardian, or other legally responsible person must file it for the child. Signing the child's FBAR. If the child cannot sign his or her FBAR, a parent or guardian must electronically sign the child's FBAR.  

You are right you have to file T1135, and yes cash also counted towards the threshold to file T1135.  

Since you received stocks as a gift, the fair market value at the time of gifting becomes your new cost and any appreciation after that is your capital gains if you sell them. You have to document the fair market value at the time of gift in case CRA asks for a proof of the FMV. Basically you can get a print out for the date you received the stocks as a gift from the page in yahoo finance or any other finance page which deals with stock transactions and keep it as a proof.  

The definition of first-time homebuyer was relaxed as of 2020. Under the new rules, you’re considered a first-time homebuyer if, in the four-year period prior to purchasing a home, you did not occupy a home that you owned, or one that your current spouse or common-law partner owned. That four year period begins on Jan. 1 of the fourth calendar year before the year you withdraw funds from your RRSP under the HBP, and ends 31 days before the date you withdraw the funds. For example, if you are withdrawing the funds under the HBP on July 31, 2023, the period is from Jan. 1, 2019 to June 30, 2023.