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Financial Planning / Tax Strategies
|Subject: Re: Capital Gains for US Citizen Residing in Can||Date: 2/16/2013 5:08 PM|
|Author: WPatch||Number: 117798 of 119726|
I have never prepared a Canadian or Provincial return, so this is uninformed general knowldge. I have known US citizen Canadian residents and they tell me preparing the various sets of returns is complex. If in doubt get professional help. A Canadian CPA is a Chartered Public Accountant.
1. First step: Read the Manual, including the Instructions to the various forms you will be preparing, the applicable Canadian and Provincial Pubs, US Pub 17, the IRS pub on the US Canada tax treaty, and the IRS pub on tax treaties. I suspect there are good inexpensive annual books on Canadian tax preparation, my lack of knowledge is not a sign of any fault of any of these. Anything I say that contrdicts the Manual is probably wrong.
2. Canadian and Provincial Tax forms require all non-Canadian entries to be in Canadian dollars, so to do these you must convert US to Canadian.
3. Canada taxes capital gains only on Canadian residents, and only during the period of residence. If the assets you sold were held by you when you became a Canadian resident the cost basis would be determined by the market value on that date.
4. My understanding is that Canada uses an average basis rather than FIFO for determining basis of securities sales. I am less sure about this than the other items.
5. To do US tax returns all figures must be reported in US dollars. Since the US brokerage sales were in US dollars, do not convert. Canadian dollar entries must be converted.
6. Form 1116 Foreign Tax Credit is a bear. Much worse if AMT must be computed.
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