Introduction xiii1 The Basics of US Taxation 11. History of the Internal Revenue Service (IRS) 12. The Basics 33. Dealing with the IRS 44. The IRS Examination (Audit) Process 65. Filing 85.1 When to file your Individual Income Tax Return(Form 1040) 105.2 Electronic filing 115.3 Penalties and interest for underpayment,late filing, and late payment 115.4 Filing status 126. Notifying the IRS about Your Change of Address 13Contentsiv Taxation of Canadians in America2 Your First Year in the US 141. Determining US Residency 141.1 First year elections 172. How Do I Get an Identification Number? 203 The Treaty 231. Residency 272. Real Property 293. Dividends, Interest, and Royalties 304. Gains 315. Personal Services 326. Artists and Athletes 337. Pensions and Annuities 348. Social Security 359. Government Service 3610. Students 3611. Taxes Imposed by Reason of Death 364 Canadian Taxation of Nonresidents 381. Who Is Considered a Nonresident of Canada? 392. Selling Property in Canada 455 Foreign Tax Credits 471. What Are Foreign Tax Credits? 482. Types of Foreign Income 513. How to Calculate the Foreign Tax Credit 524. Alternative Minimum Tax (AMT) 556 Registered Retirement Plans, Pensions,and Social Security 571. Registered Retirement Plans 581.1. Deferral 581.2 Distributions 59Contents v1.3 Planning 611.4 How the taxes work 661.5 Other types of accounts 702. Pensions 713. Social Security 723.1 The Windfall Elimination Provision 737 Investments 741. Securities Law 742. Mutual Funds 752.1 Passive foreign investment company (PFIC) rules 762.1a Qualified electing fund (QEF) 772.1b Mark-to-market election 782.1c Excess distribution 783. Tax Reporting Slips 794. Taxation of Specific Types of Investments 804.1 Municipal bonds 804.2 Government bonds 804.3 Annuities 814.4 Personal residence 814.5 Investment real estate 815. Treaty Rules That Affect Your Securities 828 Common Deductions 841. Above-the-Line Deductions 852. Trade or Business Expenses 863. Vacation or Rental Home Expenses 874. Depreciation, Amortization, and Depletion Expenses 915. Individual Losses to Property 926. Alimony and Child Support 947. Contributions to Individual Retirement Accounts (IRAs) 948. Moving Expenses 969. Health Savings Accounts (HSA) 96vi Taxation of Canadians in America10. Qualified Education Expenses andStudent Loan Interest 9711. Exemptions 9812. Standard Deductions or Itemized Deductions 9912.1 Standard deductions 9912.2 Itemized deductions 10013. State and Local Taxes 10114. Interest Expenses 10115. Medical Expenses 10316. Employee Educational Expenses 10517. Charitable Contributions 10618. Miscellaneous Itemized Deductions 10819. Credits 10919.1 Child and dependent credit 11019.2 Credit for the elderly or disabled 11019.3 Child tax credit 11119.4 Earned income credit 11119.5 Education credits 11119.6 Retirement savings contributions credit 11219.7 Other credits 1129 Tax Planning 1141. Tax Planning in General 1162. Specific Tax-Planning Opportunities 1172.1 Your principal residence 1172.2 Other real estate investments 1182.3 Securities 1182.4 Series EE bonds and I bonds 1193. Tax Breaks for Senior Citizens 1194. State Income taxes 1195. Community Property 121Contents vii10 US Estate and Gift Taxes 1231. US Nonresident Estate Tax 1272. US Resident, Noncitizen Estate Tax 1312.1 Jointly held property 1353. Gift Taxes 1354. Generation Skipping Transfer Tax 1375. State Estate and Inheritance Tax 13811 Leaving the US 1411. Expatriation 1421.1 Your rights after renunciation of US citizenship 1481.2 The Reed Amendment 1492. Tax Planning before You Leave 150Conclusion 151Resources 153About the Authors 157Tables1 Income Threshold for Filing 102 US Immigration Options 213 Your Status: Nonresident Alien or Resident Alien 224 Treaty Articles 265 Types of Income and Withholding Rates 376 RRIF Minimum Withdrawals by Age 637 Summary of Expenses 768 The Format of the US Individual Income Tax Return(Form 1040) 859 Trade or Business Expenses 8810 Vacation/Rental Home 9111 Classes of Depreciation Property 9212 Standard Deduction Amounts 9913 Additional Deduction Amounts 99viii Taxation of Canadians in America14 Limits on Medical Deductions 10515 Gift and Estate Tax Rate Schedule 13216 Unified Tax Credits and Exclusion Amounts 13317 State Estate and Inheritance Tax 138
