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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Good Day Im a Canadian fellow that earns all my income from

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Good Day
I'm a Canadian fellow that earns all my income from Canada and I am not a US citizen nor do I have a green card. I do own a small beach house in Florida and am about to purchase a bigger one, my wife and I use the property for ourselves 2 - 3 times a year. I have filled out a W8-BEN and claim all income and expences on my Canadian taxes and I'll do the same with the new property. The 1st property brings in about 27k a year but at the end of the year all that is used up on expences and I assume that that will be the same story for the new property. We also own a boat that is in a charter company for a three year term but does not make enough money to cover expences. I do not file any US taxes because I'm told that as long as i fill out the W8-Ben and claim all on my Canadian taxes that all is legal because there is a tax treaty in place between Canada and the USA for this pupose. Do you agree that all is legal and good?
Ray
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Hello, and thank you for using JustAnswer.com. While it's true that the US and Canada have a tax treaty, you have income generated from activity in the United States. Therefore, you have a tax liability to the United States for this activity. You still need to file a 1040 NR and claim this income, even if you have a net loss each year.

Since the income is generated in the United States, you will owe tax there and the treaty benefits will come on your Canadian return. I suggest you find a CPA or EA - or professional in your country - who specializes in Canada/US tax returns.

I am sorry if this is not optimal in your situation. Please feel free to contact me back if you need any additional information.

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Customer: replied 4 years ago.

I've never even heard of that form but will find one. Will one need to be filed for each property and the boat or just one does them all?
Also, do I need to file for previous years and if so should they be filed individually?

Thanks for your follow up.

1040 NR is your general tax return - you only file one of them. You will file two schedule E's - one for each property, and one schedule C for the boat activities.

I would really enact the assistance of an American tax professional, as this type of return is very complex. Their fees should be fairly reasonable - figure $200-$500 per year.

You also have to do one return for each year, and then I'm sure you could amend your Canadian return to claim the tax treaty benefits, although I'm not a Canadian tax expert.

Thanks for using JustAnswer and let me know if I can be of further assistance.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site**

Customer: replied 4 years ago.

I assume that I'm filling out the 1040 nr only because I'm receiving income from a US source, not because I'm now classified as having a trade or business right?
The properties are in my name only, therefore it would only be myself that would have to file the tax to the US and not my wife, right?

Thank you for your follow up. You are correct - you have US generated income, not a business.

If you are the sole owner, you would file on your own if you like or you can file joint. It's up to you.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site**

Customer: replied 4 years ago.

if I decide to sell my previous house and/or the boat, would there be much tax consequences from the us if I couldn't sell for as much as I paid?

If you sold the house/boat for less than you paid, you would still file a tax return, although you would not have a tax liability at that point. Keep in mind that you have to depreciate the asset, and if you don't depreciate and take that expense the IRS will impose it when you sell the asset. However, your tax liability should be minimal so long as the asset is not fully depreciated.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site**

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