International tax question -- please help

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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Reply to
junkmail1150
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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

Reply to
pleasedontemailme

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.

Reply to
parrisbraeside

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, snipped-for-privacy@iecc.com, Primary Perpetrator of "The Internet for Dummies", Information Superhighwayman wanna-be,

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ex-Mayor"More Wiener schnitzel, please", said Tom, revealingly.

Reply to
John L

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.

Reply to
parrisbraeside

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, snipped-for-privacy@iecc.com, Primary Perpetrator of "The Internet for Dummies", Information Superhighwayman wanna-be,

formatting link
ex-Mayor"More Wiener schnitzel, please", said Tom, revealingly.

Reply to
John L

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

Reply to
pleasedontemailme

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