Direct link to our Interactive Forum.
Quick Links
What's New
Important Tax Dates
Tax Return Preparation
We Serve the Profession
Canadians in the USA
Americans in Canada
US Citizen Expatriates
Business Matters
In The U.S.A.
In Canada
Useful Links
Join a Winner
IRA's Compared
Watch for Our Tax Webinars
Our free access tax webinars provide useful cross border tax planning information. Watch for webinar schedules to be posted here....
U.S. Election
We are currently reviewing possible changes to the Internal Revenue Code which may be made as a result of the recent U.S. election. Please keep posted for important updates.
Fifth Protocol Changes
See our analysis of the important changes to the Canada U.S. Treaty effective January 1, 2008. Link is on this page.
Check out Our Forums
Click on the "Web Forum" link at the top left of any page to browse our Forum, for a wealth of tax and immigration issues currently under discussion.

CREATIVE SOLUTIONS TO 

CROSS BORDER TAX ISSUES 

IRA COMPARISON CHART:

This chart summarizes the different IRA options available today:

Item

Traditional Nondeductible IRA

Traditional Deductible IRA

Roth IRA

Who is eligible?
 

Any person under age 70 ½ who has earned
income
 

Any person under age 70½whohasearned
income
 

Any person of any age I who has earned income
                        .

Maximum contribution

Lesser Of $2,000 or 100% of earned income if single, If married, contribution may be up to lesser of $4,000 or 100% of earned income

Lesser Of $2,000 or 100% of earned income if single, If married, contribution may be up to lesser of $4,000 or 100% of earned income

Lesser Of $2,000 or 100% of earned income if single, If married, contribution may be up to lesser of $4,000 or 100% of earned income

Is the contribution deductible?

No

Yes, if participant is not covered by a qualified plan. If one spouse is covered by a qualified
plan, then the nonparticipant spouse may make a deductible contribution, if filing jointly and adjusted gross income (AGI) is $150,000 or less.
Deduction Phased out for AGI between $150,000 and
$160,000.'
 

If participant is covered by a qualified plan,
fully deductible if AGI is $30,000 or less, if
single, and $50,000 or less, if married.
 

Not deductible if AGI is $40,000 or more, if single, and $60,000 or more, if married.
 

Deduction phased out
ratably between above
limits.2

No

Are earnings currently taxed?

No

No

No

Taxation of withdrawals at death and disability'

Contributions are received tax-free and earnings are taxable.

All distributions are taxable.

No taxation of distributions.

Taxation of $10,000 withdrawn for flrst-time home purchase'

 Proportionate part attributable 10 earnings
is taxable

All $10,000 subject to income tax

No income tax

Taxation on withdrawals to pay for medical expenses'

Proportionate part
attributable to earnings taxed as ordinary income. For those under age 59 ½, 10% penalty does not apply to amounts that qualify as deductible medical expenses; e.g., amounts in excess of 7.5% of
AGI.
                 

Entire withdrawal taxable as ordinary income. For those under age 59 ½, 10% penalty does not apply to amounts that qualify as deductible medical expenses; e.g., amounts in excess of 7.5% of
AGI.

Earnings are taxable at ordinary rates unless IRA owner is age 59 ½or older and established Roth lRA five or more
years prior.

Taxation on withdrawal to pay for educational expenses

Proportionate part attributable to earnings
is taxable

Entire withdrawal is subject to income lax.

Earnings are taxable at ordinary rates unless IRA owner is age 59½ or older and established Roth IRA five or more
years prior

Taxation of distributions not covered above2

Nondeductible
contributions received tax-free. Earnings arc taxed at ordinary rate.

All distributions are
taxable at ordinary rates.

Earnings are taxable at ordinary rates unless IRA owner is age 59 ½or older and established Roth IRA five or more
years prior.

Are there required, minimum distributions?

Distributions must start at age 70 'Minimum is calculated on life expectancy.

Distributions must start at age 70 'A. Minimum
is calculated on life expectancy.

No minimum
distribution is required

By when must an IRA he t up and funded?

Plan must be set up and funded by April 15 of calendar year following year to which the contribution applies.

Plan must be set up and funded by April 15 of calendar year following year to which the contribution applies.

Plan must be set up and funded by April 15 of calendar year following year to which the contribution applies.

1 For tax years after 1997. Under prior law, if one spouse was a participant in a qualified plan, both spouses were considered to be participants, with any IPA contribution subject to the regular phaseout rules.

2 Phase-out ranges are for 1998 only; future years will have different phase-out ranges. Previously, the ranges were:(1)MFJ - AGI of $40,000 - $50,000; (2) Unmarried - AG of $25,000 - $35,000; and (3) MFS - AGI of $0- $10,000.

3 For individuals under age 59 ½. The 10% penalty tax does not apply in these situations.

4 All taxable amounts are subject to penalty tax of 10% if received prior to age 59 1/2, unless the above exceptions apply. Also, for traditional IRA, the penalty is waived it distribution is annuitized.

CREATIVE SOLUTIONS TO CROSS BORDER TAX ISSUES

Mark T. Serbinski Certified Public Accountants and Serbinski Partners PC, Chartered Accountants specialize in situations involving the taxation of U.S. citizens living abroad and Canadians living or working in the United States.  Please contact us for a complimentary initial review of your particular situation on a confidential basis.

For more information, E-mail or call us TOLL FREE at

            1-888- US TAXES
Picture

Last Update: Jul 13, 2010    Copyright ©2008 by Serbinski & Associates, Inc., - ALL RIGHTS RESERVED Unauthorized reproduction prohibited. Although we strive to provide accurate and timely information on this site, the information contained herein deals with complex issues in a concise manner, which may cause unintended results if taken out of context, and is therefore intended for general information purposes only. No action should be taken without obtaining prior legal, accounting or other appropriate professional consultation. To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained on this web site was not intended or written to be used, and cannot be used, by the recipient (a) for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions and (b) for the purpose of promoting, marketing, or recommending any tax-related matters addressed within to another party.