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Subject Author Date
International tax question -- please help junkmail1150 06-12-2007
Posted by junkmail1150 on June 12, 2007, 1:06 am
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 OK, let me ask a more general question and hope someone out
there has an answer before Friday.

I am an American citizen who lives in Canada.

I understand there are tax treaties in effect between the
U.S. and Canada to prevent double taxation of citizens
living in the other country.

If I'm not mistaken, permanent residents of Canada have to
report all income, no matter where it comes from.

The U.S. allows you to take a credit against foreign taxes
paid on foreign income.

But what about the taxes I paid to Canada on U.S. investment
income (cap-gains distributions and ordinary dividends)? How
do I avoid paying taxes twice on that income?

I called the IRS international tax-help line, but this was
beyond the guy's expertise. Can anyone out there help?

Thanks,

Matt

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Posted by pleasedontemailme on June 18, 2007, 9:27 am
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 unkmail1150@yahoo.com wrote:

> OK, let me ask a more general question and hope someone out
> there has an answer before Friday.
>
> I am an American citizen who lives in Canada.
>
> I understand there are tax treaties in effect between the
> U.S. and Canada to prevent double taxation of citizens
> living in the other country.
>
> If I'm not mistaken, permanent residents of Canada have to
> report all income, no matter where it comes from.
>
> The U.S. allows you to take a credit against foreign taxes
> paid on foreign income.
>
> But what about the taxes I paid to Canada on U.S. investment
> income (cap-gains distributions and ordinary dividends)? How
> do I avoid paying taxes twice on that income?
>
> I called the IRS international tax-help line, but this was
> beyond the guy's expertise. Can anyone out there help?

You would probably find it helpful to refer to
Publication 54 Tax Guide for US Citizens Abroad
Publication 514 Foreign Tax Credit for Individuals
Publication 597 Information on the United States-Canada
Income Tax Treaty

The tax paid to Canda on US-source income is deductible on
Schedule A. This is not a good deal for the taxpayer.

-Crystal


<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by parrisbraeside@yahoo.ca on June 18, 2007, 9:27 am
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junkmail1...@yahoo.com wrote:
> OK, let me ask a more general question and hope someone out
> there has an answer before Friday.
>
> I am an American citizen who lives in Canada.
>
> I understand there are tax treaties in effect between the
> U.S. and Canada to prevent double taxation of citizens
> living in the other country.
>
> If I'm not mistaken, permanent residents of Canada have to
> report all income, no matter where it comes from.
>
> The U.S. allows you to take a credit against foreign taxes
> paid on foreign income.
>
> But what about the taxes I paid to Canada on U.S. investment
> income (cap-gains distributions and ordinary dividends)? How
> do I avoid paying taxes twice on that income?
>
> I called the IRS international tax-help line, but this was
> beyond the guy's expertise. Can anyone out there help?

Canada allows you to take a credit against the foreign taxes
paid on the US Investment Income.

This is where a Canadian-US Tax Preparer would come in handy
for you. They know how to do this.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by John L on June 18, 2007, 9:27 am
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> But what about the taxes I paid to Canada on U.S. investment income
> (cap-gains distributions and ordinary dividends)? How do I avoid
> paying taxes twice on that income?

Since there is a tax treaty between the US and Canada, you
can take a credit on form 1116. Publication 514 sort of
explains it. See the discussion of tax treaties on page 21
of pub 514, and in particular the worksheet on the last two
pages that is specificially for this situation.

Canada also allows you to take a credit for foreign taxes on
foreign income, on lines 431 and 433 of your Canadian tax
form. See the instruction booklet.

Regards,
John Levine, johnl@iecc.com,
Primary Perpetrator of "The Internet for Dummies",
Information Superhighwayman wanna-be,
http://www.johnlevine.com, ex-Mayor
"More Wiener schnitzel, please", said Tom, revealingly.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by parrisbraeside@yahoo.ca on June 19, 2007, 9:30 pm
Please log in for more thread options
junkmail1...@yahoo.com wrote:

> OK, let me ask a more general question and hope someone out
> there has an answer before Friday.
>
> I am an American citizen who lives in Canada.
>
> I understand there are tax treaties in effect between the
> U.S. and Canada to prevent double taxation of citizens
> living in the other country.
>
> If I'm not mistaken, permanent residents of Canada have to
> report all income, no matter where it comes from.
>
> The U.S. allows you to take a credit against foreign taxes
> paid on foreign income.
>
> But what about the taxes I paid to Canada on U.S. investment
> income (cap-gains distributions and ordinary dividends)? How
> do I avoid paying taxes twice on that income?
>
> I called the IRS international tax-help line, but this was
> beyond the guy's expertise. Can anyone out there help?

Canada allows you to take a credit against the foreign taxes
paid on the US Investment Income.

This is where a Canadian-US Tax Preparer would come in handy
for you. They know how to do this.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>

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