Mapping T3/T5 to 1099-Div

I have been struggling over filing my US taxes all week and I was hoping someone could help me out here.

I am a dual Canadian/American citizen, born and raised in Canada and moved to California in late 2007. I will be filing taxes in both countries for 2008 (I consider myself a US resident, but I'm not sure if Canada does- I filed the questionnaire to determine residency status today but considering I still have a bank account/credit card/investment account/RRSP in Canada I'm not sure it will be approved).

Unfortunately I did not realize the importance of updating my address with my investment company until now, so they sent me my T3/T5 forms to my parents address in Canada instead of the non-resident forms that I need to fill out my US taxes. They say then can not retroactively change my address for 2008. I can not figure out how to report my investment dividends, as reported on the T3/T5 for US taxes. Basically, in TurboTax it asks for the numbers from the 1099-div form (the US T3/T5 equivalent), and I don't know which box from the T3/T5 corresponds to ordinary dividends. I also don't know how to estimate the "foreign taxes paid" for each investment. This is required for the deduction for foreign taxes, to ensure I don't pay taxes in both countries.

I have called both the Investment company and the International Tax Services Office of the CRA and no one seems to have any idea. I don't want to pay $500 for an hour with a tax consultant, as my investments aren't very big to begin with. If anyone has any advice, I would GREATLY appreciate it. Thanks!

-- Wed Apr 08, 2009 5:50 pm --

Also, I just wanted to confirm that I'm right to file taxes in both countries. I received a T4 for 2008 from my former Canadian employer for contracting work done in the US at the end of 2007, paid out in Jan 08. I also have a T5 from my bank savings account and my investment account, and a T3 from a trust part of my RRSP. I do not have any property in Canada, and I let go of my Alberta Health Care at the end of 2007. However, I wanted to keep my Canadian bank accounts for trips home, and investments/RRSP as I eventually plan to return. My canadian drivers license expired in Dec 08 and I did not renew it. I have a job, bank account, credit card, investment account, and retirement account in the US now as well. Does filing taxes in Canada just depend on whether you are considered a resident? Can I retroactively submit a change of residency for 2008?

And on the other hand, if I plan to move back to Canada in the next year or two, is it just easier to continue paying taxes in Canada instead of having to renew my residency if/when I move back.

Finally, like some other posters on here, I just realized that ever since I gained my US (dual) citizenship about 8 years ago, I should have been submitting a 1040. I will try to retroactively submit those for the last few years, but do I have to submit them for years when I was still a dependant of my parents for tax purposes (in college?).

Lots of questions, I know. Any help is appreciated!!!

You have to submit 1040s for every year you were an LPR and US citizen unless you're under the reporting limit. Doesn't matter where you lived. Also you'll need to file Form 2555-EZ for every year your tax home was outside the US.

From the sounds of it you are a US resident not Canadian, you need to tell the CRA you are non-resident, filling NR-73 in this situation is simply going to cause you trouble because you're giving the CRA information they wouldn't otherwise have had.

Doesn't matter about your RRSPs (for 2008 anyway), they're treated as IRAs now under the 2008 tax treaty, file Form 8891 to declare them.

I can't comment on TurboTax (I doubt it can do Form 8891 so you may as well forget it), but any income from T3 or T5 needs to be reported as income on your US tax return (converted into USD), bank interest isn't subject to reporting requirements, you just declare it on your US tax return and pay tax on it in the US.

You need to declare to the bank(s) in Canada that you are no longer resident for tax purposes, now that Part XIII tax has been abolished on most things a T5 and an NR4 are very similar except one says to the CRA you're resident and the other one says you're non-resident.

What I would do as a starting point is phone the CRA, tell them you were non-resident for 2008, give them a list of Canadian-source income that you have and ask them if you need to file a non-resident T1 (I don't think you do from the sounds of it).

I think you're too late for 2007 so just tell them you left on the 31st December 2007. That way you also can file a 1040 for 2007 with a 2555-EZ covering the whole year, the only wrinkle will be if you were employed in 2007 in the US, if you were then you might have to get a bit more complicated with the 2555-EZ, read the instructions carefully.

The CRA may now want to deem you resident for 2008 but I think it's going to be hard to pull off because you clearly have more residential ties to the US than to Canada.

The other thing you need to be aware of when moving your tax home out of Canada is departure tax.

Should have sorted this out on your last tax return, if you didn't you'll have to file an adjustment for 2007 and pay any tax you owe the CRA.

From the sounds of it you may not be subject to it.

Thank you so much for the detailed reply! I've definitely been going about everything the wrong way, so hopefully I can fix this up.

I have one more question - considering I came to the US on Oct 16, 2007, and went back to Canada for Christmas on Dec 27-Jan 6, can I still say I became a resident on 12/31/07, as you recommend, even if I wasn't physically in the country that day? I was not working in the US in 2007. I could argue that I was a resident of the US starting Oct 07, or I could argue I was a Canadian resident and just visiting/scoping the US in 07. I lived with (visited) family until the middle of Nov, when my sister and I co-rented an apartment. I canceled my AB health insurance 12/31/07. I don't know what day (oct, dec 31, jan 6) would be best to say I became a non-resident for both US/Cdn tax considerations and departure tax. If I said I left Jan 6, I would not have to redo my 2007 taxes and pay interest on the departure tax, correct?

Also - I was calculating my 2007 Foreign Earned Income Exlusion and if I say I left my Canada residency Oct 16, and use the physical presence test, and recalculate the maximum foreign earned income exlusion based on 288 day presence, I am $1,400 over the exclusion. Thus, I think it is best to say I was still a bona-fide resident of Canada for all of 2007.

It doesn't matter that much about when you physically entered the country, it depends on your intent and what residential ties you had to each country. There is a bit of fudge room there because tax courts understand that it takes some time to move residency from one country to another. So from the sounds of it, it is entirely reasonable to say you moved your tax home at the end of 2007. It's far better to do it that way if you can because each tax return covers a full tax year so there's no need to pro-rate anything or file dual-status.

As you weren't employed in the US in 2007, I can't see that it's a problem for you to say you left at the end of 2007, especially as your healthcare ended then which is one of the main determining "residential ties" for tax purposes.

Thank you!

I have another question regarding Schedule B and Foreign Trusts. I had a foreign trust that was my former Cdn Employers pension plan and was transferred to my RRSP in March 08. I have a T3 from the first part of that year with dividends.

The IRS page for Foreign Trust Reporting Requirements says to report Foreign Trusts on Form 3520, Schedule B-Part III, and TD F 90-221. But it does not mention reporting dividends on Schedule B-Part II. Do you have to report trust dividends there? I reported my Cdn bank account interest in Part I and my Cdn mutual fund dividends in Part II, so correct me if I am wrong.

For Schedule B-Part III, Line 8, it asks if you recieved a distribution from a foreign trust.. does a dividend qualify as a distribution?

Thanks again!

-- Mon Apr 13, 2009 1:45 pm --

Okay I've done some more research since I posted the last question.. and it seems like the whole RPP issue is rather vague. Some sites say to ignore RPP reporting altogether, but others say to report it as you would a RRSP and file a separate 8891 for it to defer tax, and report it in TDF 90-22.1. It is all very difficult as there is no account number, and there is no way to find out the max balance. But I will lean on the safe side and file the 8891 and TDF as best I can. I will also not report the RPP dividends in Schedule B, and only my Cdn bank account interest and mutual fund dividends.

I believe as the RPP is considered similar to an RRSP I also do not have to fill out form 3520. Does this all sound good?

I couldn't even hazard a guess on transfers to an RRSP while you're a US tax resident, that is really obscure if that's what you're on about. But you do have to declare the RRSP on 8891, after that they're essentially treated like IRAs because of the 2008 tax treaty.