March 1997
CEN-TA PEDE
david ingram's
US/Canadian Newsletter
March
1997
REGAL CAPITAL PLANNERS is Canada's largest independent fund
distributor.
CEN-TA prepares U.S. and
Canadian tax returns & gives advice
Taxation based upon where you work, not where you live Page 223
MORTGAGE INTEREST
AS A DEDUCTION IN CANADA PAGE 224
DID YOU KNOW?
-- TAXATION IS BASED UPON WHERE YOU WORK, NOT WHERE YOU LIVE.
Canadians performing services in the United States and in 43 of the
states in particular are required to file the respective state return(s) and
a U.S. federal 1040NR or 1040 income tax return, even if their remuneration
was paid from Canada. This applies, but is not limited to:
*
Executives attending meetings in the USA and in particular, California,
*
Service technicians servicing Canadian products under warranty,
*
Salespeople selling Canadian products in the USA,
*
Journalists (for instance covering the LA riots or O J Simpson trial),
*
Horse trainers, race car mechanics.
* The above are exempt from tax up to $10,000 but must file returns to
prove their exemption per Article XV. Over $10,000, taxation depends on where
the employer gets its ultimate tax deduction for the wages paid out. If you
are in the U.S. more than 183 days, you are taxable on world income.
**
Entertainers, actors, musicians, performers,
**
Professional athletes, race car drivers, jockeys.
** The above are exempt from tax up to $15,000 but still have to file the
return to prove their exemption under Article XVI.
*** Transport Employees, Truckers, Flight Attendants, Pilots.
*** Transportation employees are exempt from tax in most cases even if in
the USA for more than 183 days, if they are exercising their regular
employment. They must, however, file the tax return to exempt the income.
With Chartered Accountants, U.S. Lawyers, and U.S. CPA's as associates, I
feel that the CEN-TA Group has the experience and the
qualifications to look after most, if not all, US / Canadian tax problems.
Contact George Hatton, Sonja Clark, D'Arcy von Schleinitz, or David Ingram
for US and CANADIAN INCOME TAX PREPARATION and CONSULTATION.
MORTGAGE INTEREST AS A DEDUCTION
People usually think that Americans have it all because they can deduct their
mortgage interest and property tax on their income tax return. This is true.
They can make these deductions but to do so, most families give up a $6,000
standard deduction. This is fine if your mortgage interest is $30,000, but
the practical fact is that 90% of mortgages in the U.S. are $50,000 or less
and interest on $50,000 isn't enough to justify giving up the standard
deduction.
In
addition, Americans PAY TAX ON THE PROFIT when they sell their
principal residence.
(There is a limited once in a lifetime "up to
$125,000" exemption for those 55 and over and you can roll over the profit
into the next house provided it is of equal or greater value.)
The US deductions are not free. There is a future
potential tax liability. The house profit is taxable even if you did not
claim the deductions.
Canadians, DO NOT PAY TAX on profits from the sale of the
family home. AND, Canadians can re-arrange their affairs to make their
mortgage deductible.
