"Mark Rigotti, CPA" <rigotti[at]wideopenwest.com> wrote in
- quote -

Did that first thing, Mark.

- quote -

Like I said, I was very sick and the brain wasn't working
_at all_.

All the information below is very helpful and I thank you
very much.

My client was also asking me about Canadian tax preparers (I
had told him flat out that I'd never done any Canadian taxes
and didn't think I should try), so I will pass along your
referral. The only alternate I'd thought of was the yellow
pages. I have a brother-in-law who lives in Halifax, but he
does his own...


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I feel awfully guilty -- I have been looking at this for a
few days, I know the answer, I've just been so
busy..........

"Catherine White" <cgrantNoSpam[at]alum.mit.edu> wrote:

- quote -

1) Since he is filing the return on a 1040 (not a 1040NR),
then he may claim the mortgage interest deduction on
Schedule A just like any other 1040 filer. There is no
problem with the home being outside the US. That being
said, as ling as the interest is claimed on the 1040, it
will also be available to be put on the 1116, subject to the
same rules of allocating it between US and foreign income as
any other US resident. Barring any specific rules on an
item that says you CAN'T deduct/include it, he will be
treated just like a resident.

2) I look up my Canadian exchange rates at
http://www.bank-banque-canada.ca/en/exchange.htm . For
income/payments occurring at about the same amount every
month, there is an annual average to use (C$1.301 = US $1.00
or C$1.00 = US$0.769 for 2004 returns). For individual
transactions, there are monthly and daily averages
available.

I hope they didn't run away....

Bryan
--
Bryan Kellar, EA
Oregon Tax Help, Inc. -- Portland, Oregon
www.oregontaxhelp.com
www.canadatax.org

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"Here's the situation: client lives in US since 2/04, with
dependent child. Client's spouse and dependent parents
continue to live in Canada. He can file MFJ here with an
ITIN for his wife (to be applied for), plus w-7's for child
here and dependent parents there. He has US source income
from Feb - Dec 04. He has a small amount of Canadian source
income from Jan 04. His wife has Canadian source income for
all of 04. Plus they have a house with a mortgage in
Canada. I'll have to pull in all of her Canadian source
income for MFJ. Is there a convention for dealing with
exchange rates varying over the year? Can I claim his
Canadian mortgage interest paid on Form 1116?

Any help much appreciated, either through the group or sent
to me separately. I am sick and my brain just can't think
things through...."

Catherine,

Get an extension first.

1116 for mortgage interest????? That's foreign taxes not interest.

Basically, make and election to treat the NR spouse as a
resident. see sample: just attach statement to the return.

Non-Resident Alien Spouse
Taxpayer (a USA Resident) married a resident of Canada
(nonresident alien) during 2004. Taxpayers and spouse
elect to both be taxed as USA residents for the whole
tax year.
Taxpayer: XXXXXXXXX (insert taxpayer info)
Spouse: XXXXXXXXX (insert spouse info)

Now you have a straight forward 1040 (except for the
conversion of the Canadian dollar to the US dollar - use a
monthly or yearly average). Remember to report all Canadian
income (worldwide income concept) No foreign tax credit or
anything like that. Let the Canadian side take the credit
there. (their taxes are generally higher than ours and it
sounds like the majority of the income is from the states
anyways.)

Would suggest that you not even attempt a Canadian T-1 -
everyone files as single, limited deductions, etc ...... If
you're looking for a good Chartered Accountant in Canada I'd
suggest you try who I use - Foo Yee, Charter Accountant -
Windsor, Ontario. Sorry I do not have his phone # handy but
his firm is listed in the phone book (directory assistance)
(1-519-555-1212 for Windsor, ONT) Tell him I sent you.

Rgs,

Mark Rigotti, CPA
(Detroit area)

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Tried to get info from the IRS on this one; they took my
question and hope to get back to me by the 14th. Eeek.
Hope someone here (maybe in a border state?) is familiar
with this type of situation.

Here's the situation: client lives in US since 2/04, with
dependent child. Client's spouse and dependent parents
continue to live in Canada. He can file MFJ here with an
ITIN for his wife (to be applied for), plus w-7's for child
here and dependent parents there. He has US source income
from Feb - Dec 04. He has a small amount of Canadian source
income from Jan 04. His wife has Canadian source income for
all of 04. Plus they have a house with a mortgage in
Canada. I'll have to pull in all of her Canadian source
income for MFJ. Is there a convention for dealing with
exchange rates varying over the year? Can I claim his
Canadian mortgage interest paid on Form 1116?

Any help much appreciated, either through the group or sent
to me separately. I am sick and my brain just can't think
things through....

Catherine

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