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QUESTION:
Hi David: I am wondering if you might be able to answer my confusion. A lawyer friend told us that we need to file T2062 since we are selling our property and moving to US. We are unable to rent it out because of the rental restrictions. However it said that once we dispose our property even with the T2062 filled, CRA will take 25% off the profit. Are we never going to get this money back from CRA? We already have an offer for $270K and we bought it for $190K meaning the profit is $80K. It just sounds as if we are being punished by CRA for moving to US if we never see the $20K back. This property is our principal home resident. Many thanks and hope you can help with our confusion.
-----------------------------------------------
david ingram replies:
Since it has not been rented out and assuming it is the only one you
own and that you lived in the property as your only residence, any
profit (the $80,000 you mention) up to the day you leave the country is
tax free as your principal residence under Section 54(g) of the
Canadian Income Tax Act. If you sell it BEFORE you leave, there is NO
reason to get involved with a T2062 AND T2062A.
If you or your husband has already left the country, the purchaser and
his or her lawyer will want to be protected and want a clearance
certificate.
The Clearance certificate is issued by the CRA after you have filed
the forms T2062 and T2062A. Note that the T2062 and T2062A calculations
do NOT allow the deduction of any selling expenses such as legal or
commissions.
The clearance certificate gives the CRA's ruling about what the 25%
withholding tax should be taken from.
If there is NO profit that the CRA determines, there is no
tax.withholding.
I will give a low key example however.
If the house was worth $260,000 when you left and sold for $270,000
less a $10,000 Real Estate Commission, the CRA would want 25% of the
$10,000 obvious profit and your lawyer would have to remit $2,500 to
the CRA.
When you did your tax return on the sale, there would be no profit,
because you would only have received $260,000 after the R E Commission
and you would get your $2,500 back.
Again, if you lived in the house while residents of Canada, the $80,000
profit is not taxable because the value the CRA and whomever prepares
the T2062 for you is based upon the value the day you left or leave the
country. We do a lot of T2062 forms and can handle these for you. I
have to tell you that the CRA is taking 3 or 4 months to issue the
certificates at the moment because of the number of applications.
Three years ago, it usually took 3 weeks.
If you have an accepted sale while you are still obvious residents of
Canada , NO T2062 or withholding should be involved.
-------------------------------
These older questions will give you some other ideas as well although
none applies directly to your situation as described.
.
QUESTION:
Hello ! I am a Canadian citizen moved to USA in Jan.1.07. I am selling my house after 10 months(empty after I left).I still have bank a/c's and my wife is a Canadian PR. Will I have problems to sell my house in Chatham, Ontario. Please reply - 309-333-xxxx.
Regards
xxxxx xxxxxxxx
------------------------------------------------
david ingram replies:
I see you sent this twice - sorry it was not answered but I do get 30 to 100 a day and can not even begin to answer them all.
This has been answered for other people however in the time between the two questions.
Because you are not living in Canada, anyone buying the house is required to withhold 25% of the GROSS sale price unless you fill in and file forms T2062 and T2062A with the CRA within ten days of the actual sale.
This form would take into account that the house was your personal residence up to the day you left.
For 2007, you must file form T1161 as a departing resident. Failure to file Form T1161, can end up with a $2,500 fine as shown below. Happy to look after these departing Canada returns for you.
These similar questions were answered on Feb 17 for instance.
------
Hi David,
(1) I am a Canadian Citizen and employed in Canada from Jan 01, 2007 to
June 30, 2007 and my tax was deducted at source. I have received T-4
(2) Since the employer closed down the facility, I received
unemployment benefit until November 04, 2008. I have not received any
paper from EI income so far
(3) Since November 05, 2007, I am working in USA under TN-1 work permit
and i have W2 from my employer
Can you please tell me how much it would cost for filing tax against
above income? Which documents I need to provide you?
Next year, I would have only income from USA and how much it would cost
to file tax return. Do I have to file tax return in Canada for the
year 2008 against USA employment earning only? It is temporary yearly
base job contract. I intent to be a Canadian Citizen.
Regards,
------------------------------------------------------------
david ingram replies:
If you do not want to report your US income to Canada, you need to file
a departing Canada return including form T1161.. If your house is
rented out, you should have filed form NR6 BEFORE leaving the country.
Our fees are outlined in the Disclaimer below following some older
questions.
QUESTION: Hi David,
I am Canadian citizen, worked in Canada for the first 5 months of 2006.
then moved to US and worked then for the rest of 2006. I have income
from Canada employer, Canadian bank and US employer. I filed tax return
on my US income to IRS already. I haven't done Canadian tax return yet.
I had thought I only need to file Canadian tax return on my Canadian
income. But it seems both CRA and IRS requested to report my world
income to both. I am confused. What should I do to file the tax return
to both? More specially, I received NR4 slip from CIBC bank. I could
not find where to enter this form when I used Ufile.ca. How can I enter
US W2 form into any Canadian tax form?
How can I enter T4 slip into US tax return form? thanks a lot!
_______________________________________________________________
david ingram replies:
An NR4 does not go on the Canadian return. It goes on Schedules B and
1116 of the US return
The T4 does not go on the US return unless you are filing as a year
round resident as in 2 below.
I am too busy to come up with a new answer but this older one will give
you an idea.
QUESTION: Hi David,
I really need your help in filling U.S tax and I am getting mixed
messages which forms to file. I am a Canadian Citizen in U.S on TN visa
for more than a year. I have RRSP in Canada over 10,000 put in fixed
bond and saving account in a bank. What do I need to file here and what
forms do I need to fill. Do I still have to file tax in Canada for
Canadian earning? Please help.
____________________________________________________
david ingram replies;
You need to file a departing Canada tax return and file T1161 if you
left more things than your RRSP behind. The Canadian return will only
include Canadian earnings although if you had a Home Buyers Plan, it is
all due and taxable on the departing Canada return unless you have paid
it back.
For the US, you have two choices:
1. File a 1040NR dual status statement and a Dual Status 1040 Income
Tax return with no standard deduction
or
2. File a full 1040 which includes your Canadian income and gives you
a full standard deduction and the right to file a joint return if
married. This is usually the best if you left Canada early in the year
as you did.
If you can't figure it out, file an extension form 4868 (find it at http://www.irs.gov/pub/irs-pdf/f4868.pdf
)
and then send the information to us at the address in blue below to
complete for you.
--------------------------
QUESTION:
We moved to the US in December 2004. At the time that we did our 2004
taxes, we did not have any 2004
US income to worry about, so we used ufile.ca to do our
Canadian
taxes. We have a house in Canada that we
kept with the intent of renting it out, and were unaware of
the
requirement to file a T1161 until we began
working on our 2005 taxes with the assistance of an
accountant.
By the time he got involved, it was already
late. In January 2007, CRA assessed a late filing penalty
for
both myself and my husband as joint owners of the
property. The statement was sent to our old address, even
though
we updated our address at the time we sent
in our 2005 tax returns. My question is this: Is there any
way
that we can get the late filing penalty forgiven?
We have done everything else by the books, and we did file
the
T1161 when our accountant brought it to our
attention. Thank you.
-------------------------------------------------------------------------
david ingram replies:
The T1161 for a departing Canadian is due on April 30th of the year
following the departure. The penalty is a minimum of $100 or $25.00
per day to a maximum of $2,500. This is the same penalty for the late
filing of a T3 return with distributions.
I know of no method of officially canceling the $2,500 penalty you
will each have received. You could try writing to the FAIRNESS
COMMITTEE and explain the situation and they might cancel it. for
$5,000, it is certainly worth the effort.
You can start looking up the rules for the FAIRNESS COMMITTEE here:
http://www.cra-arc.gc.ca/agency/fairness/prov_3-e.html
I do not expect them to agree but they might.
You might write to Prime Minister Stephen Harper as well. The penalty
is unfair because although easy to find if you know what you are
looking for, NO ONE knows about it automatically.
The tax preparation programs do not tell you to fill it in when you put
a date in for departing Canada.
The $2,500 penalty is imposed after 100 days.
----
On February 11, 2008,
David
Ingram wrote:
It is very unlikely that blind or unexpected email to me will be
answered. I receive anywhere from 100 to 700 unsolicited emails a day
and usually answer anywhere from 2 to 20 if they are not from existing
clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line
and get answered first. I also refuse to be a slave to email and do
not look at it every day and have never ever looked at it when I am out
of town. e bankruptcy expert US Canada Canadian American
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However, I regularly search for the words"PAYING
CUSTOMER" and always answer them first if they did not get spammed out.
For the last two weeks, I have just found out that my own email notes
to myself have been spammed out and as an example, as I wrote this on
Dec 25, 2007 since June 16th, my 'spammed out' box has
47,941 unread messages, my deleted box has 16645 I have actually looked
at and deleted and I have actually answered 1234 email questions for
clients and strangers without sending a bill. I have also put aside
847 messages that I am maybe going to try and answer because they look
interesting. -e bankruptcy expert US Canada Canadian American
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Therefore, if an email is not answered in
24 to
48 hours, it is likely lost in space.
You can try and resend it but if important AND YOU TRULY WANT OR NEED
AN ANSWER from 'me', you will have to phone to make an appointment.
Gillian Bryan generally accepts appointment requests for me between
10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los
Angeles) time at (604) 980-0321. david ingram expert
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Disclaimer:
This question has been answered without detailed information or
consultation and is to be regarded only as general comment. Nothing
in this message is or should be construed as advice in any particular
circumstances. No contract exists between the reader and the author and
any and all non-contractual duties are expressly denied. All readers
should obtain formal advice from a competent and
appropriately qualified legal practitioner or tax specialist for expert
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gives expert income tax service & immigration help to non-resident
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family, estate, income trust trusts Cross border, dual citizen - out of
country investments are all handled with competence & authority.
Phone consultations
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that GST is added if product remains in Canada or is to be returned to
Canada or a phone consultation is in Canada. ($472.50 with GST if in
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Income Tax service and help.
This is not intended to be
definitive
but in general I am quoting $900 to $3,000 for a dual country tax
return.
$900 would be one T4 slip one W2
slip
one or two interest slips and you lived in one country only (but were
filing both countries) - no self employment or rentals or capital gains
- you did not move into or out of the country in this year.
$1,200 would be the same with one
rental
$1,300 would be the same with one
business no rental
$1,300 would be the minimum with
a
move in or out of the country. These are complicated because of the
back and forth foreign tax credits. - The IRS says a foreign tax credit
takes 1 hour and 53 minutes.
$1,600 would be the minimum with
a
rental or two in the country you do not live in or a rental and a
business and foreign tax credits no move in or out
$1,700 would be for two people with income from two countries
$3,000 would be all of the above
and
you moved in and out of the country.
This is just a guideline for US /
Canadian returns
We will still prepare
Canadian only
(lives in Canada, no US connection period) with two or three slips and
no capital gains, etc. for $200.00 up.
With a Rental for $400, two or
three
rentals for $550 to $700 (i.e. $150 per rental) First year Rental -
plus $250.
A Business for $400 - Rental and
business likely $550 to $700
And an American only (lives in
the US
with no Canadian income or filing period) with about the same things in
the same range with a little bit more if there is a state return.
Moving in or out of the country
or
part year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the
first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00
to
$100.00 each.
18 RRSPs would be $900.00 -
(maybe
amalgamate a couple)
Capital gains *sales) are likely
$50.00 for the first and $20.00 each after that.
Catch - up returns for the US where we use the
Canadian return as a guide for seven years at a time will be from $150
to
$600.00 per year depending upon numbers of bank accounts, RRSP's,
existence of rental houses, self employment, etc. Note that these
returns tend to be informational rather than taxable. In fact, if
there are children involved, we usually get refunds of $1,000 per child
per year for 3 years. We have done several catch-ups where the client
has received as much as $6,000 back for an $1,800 bill and one recently
with 6 children is resulting in over $12,000 refund.
This is a
guideline not etched in stone. If you do
your own TDF-90 forms, it is to your advantage. However, if we put them
in the first year, the computer carries them forward beautifully.
This from "ask an income trusts tax service
and
immigration expert" from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily basis with expatriate
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