Tax nightmare

[languageladki 0]

Well, my husband entered the US on a CR1 visa on April 21, 2007. Now we are trying to find out what to do with our US/Canadian taxes. We hired a so-called "tax professional" but he totally messed our returns up, at least they don't look anything like what we expected. The guy filled them out as a 1040 in the US with just my husband's US income (that earned after his move to the US) and my income (also US). He filled it out as married filing jointly. He didn't include my husband's canadian income at all beause he said that because it was income earned during the "nonresident period" (when my husband lived in Canada) that it was exempt from taxes. Nor did he include any information about my husband's RRSPs.

I read some totally contradictory things in the 1040 instructions and some other IRS documents but I am not a tax professional. Another tax professional that had a blog online told me that we should include ALL income earned for the year and then take a tax credit by either using a form 2555 or a 1116. He said that if we filed married jointly that all income earned, including Canada's had to be included. He said that if we wanted to exclude the income that we had to file married separately (including on state returns) and that we then couldn't take the standard deduction. He also said that we had to file another paper to claim the internal earnings of the RRSPs.

My question is, WHO IS RIGHT? Can we claim just his US income or do we need to file stating the Canadian income and then take the tax credits for what was paid to Canada for income tax.

Also, on his canadian return my income is not mentioned at all, but I did earn it in the US and have never lived in Canada. That seems correct to me but I am not sure. One person told us that he would have to file in Canada a T1161 if he had any assets left behind in Canada but we're not sure about that either.

This is totally confusing.

So much for hiring a tax professional a month and a half before now and still having to file extensions.

Edited April 14, 2008 by languageladki

[Chica Yeyé 41]

Here's what we did:

Married filing jointly in the US: which meant indeed claiming also our Canadian income (and using form 2555 to exclude it).

Canada does not give you the married filing jointly option, so my guess is your husband would file for himself and that's that.

Good luck, L.

[Flames9_RN 358]

Well for Canada tax purposes, you really dont exist!! lol He can claim no credits/deductions for you (assuming u resided in the usa!)

For his RRSP's he should, well HAS to fill out irs form 8891 http://www.irs.gov/pub/irs-pdf/f8891.pdf and submit it with his taxes!!

An ok cdn/usa tax forum: http://forums.serbinski.com/index.php?sid=...9e0066bcbee3f79

Ensure u do a SEARCH, as only a few people answer questions, and NELSON, can get grumpy,lol But lots of info on 2555 and 8891 on there!!

[languageladki 0]

Well for Canada tax purposes, you really dont exist!! lol He can claim no credits/deductions for you (assuming u resided in the usa!)

For his RRSP's he should, well HAS to fill out irs form 8891 http://www.irs.gov/pub/irs-pdf/f8891.pdf and submit it with his taxes!!

An ok cdn/usa tax forum: http://forums.serbinski.com/index.php?sid=...9e0066bcbee3f79

Ensure u do a SEARCH, as only a few people answer questions, and NELSON, can get grumpy,lol But lots of info on 2555 and 8891 on there!!

Thanks so much for the info. That forum is great. I asked a question of nelsona.....let's hope I don't get yelled at if it is a repeat. LOL

[Allie 5]

We went to Jackson Hewitt as they assured us they had staff familiar with our situatation on income and taxes paid in Canada and filed married jointly.

When I showed all my Canadian T4'S she said that my income from Canada wasn't required as it was below I think she said $80,000 and was money made outside the U.S.

When I asked if she was suppose to fill out a form 2555 or a form 1116 for foriegn tax credit she just kept saying no it's not required.

So we let her fill it and send it to the IRS as she stated was the proper procedure. We both still think it's coming back as not prepared correctly.

[Flames9_RN 358]

nah, the police wil just knock on ur door and take u to jail!! lol

When we first attempted to do our taxes here in the USA, I called up H&R block and told them my situation,they assured me they had a Canadian "expert" on staff. He was nooo expert. Thanks to the above site i knew a few things (and backed up from a few other websites) the Canadian "expert" had no clue on form 8891 or 2555. I thanked him for his time and left! Then went to JAckson hewitt and the fellow that helped us was great. he wasn't sure on some things, BUT he listened to what i stated about forms 8891 and 2555 and it all worked out!! This year was the first year that my taxes have been straight forward and was able to use turbo tax!! whewwwww But forms 8891 and 2555 and fairly straight forward

[Allie 5]

nah, the police wil just knock on ur door and take u to jail!! lol

When we first attempted to do our taxes here in the USA, I called up H&R block and told them my situation,they assured me they had a Canadian "expert" on staff. He was nooo expert. Thanks to the above site i knew a few things (and backed up from a few other websites) the Canadian "expert" had no clue on form 8891 or 2555. I thanked him for his time and left! Then went to JAckson hewitt and the fellow that helped us was great. he wasn't sure on some things, BUT he listened to what i stated about forms 8891 and 2555 and it all worked out!! This year was the first year that my taxes have been straight forward and was able to use turbo tax!! whewwwww But forms 8891 and 2555 and fairly straight forward

As long as they knock and don't beat the door in when they come to cart us of to the IRS Tax Jail lol,lol

Your first visit to H&R Block sounds identical to what we just had done. I even showed her some of the answers to tax questions I had from VJ regarding Canadian source taxes and income and the 2555 and the 1116 for non-resident along with things from the IRS site.

But it was " oh no we don't need all that stuff" and all she did was photocopy my GC and proceed to fill out Lorry's taxes as married jointly

We both asked several times are you sure no forms for the Canadian income have to accompany the filing? She then said "okay let me call Allen, he's an expert on these situations".

So she calls Allen and explains to him that I have Canadian source income and taxes were paid in Canada and that I arrived in the U.S. in June with my Visa and married in July.

Allen asks if I had any U.S. income since coming here? " No he only has the Canadian income slips".

Allen then tells her no need to even show his income from outside the U.S just get his SSN and file normally as married jointly

Although they figured Lorry out for a nice big refund of $2800 we are both very doubtful of the whole filing process they did for us

Although we did get a free T-shirt and hat from them to wear in prison lol.lol

[languageladki 0]

nah, the police wil just knock on ur door and take u to jail!! lol

When we first attempted to do our taxes here in the USA, I called up H&R block and told them my situation,they assured me they had a Canadian "expert" on staff. He was nooo expert. Thanks to the above site i knew a few things (and backed up from a few other websites) the Canadian "expert" had no clue on form 8891 or 2555. I thanked him for his time and left! Then went to JAckson hewitt and the fellow that helped us was great. he wasn't sure on some things, BUT he listened to what i stated about forms 8891 and 2555 and it all worked out!! This year was the first year that my taxes have been straight forward and was able to use turbo tax!! whewwwww But forms 8891 and 2555 and fairly straight forward

As long as they knock and don't beat the door in when they come to cart us of to the IRS Tax Jail lol,lol

Your first visit to H&R Block sounds identical to what we just had done. I even showed her some of the answers to tax questions I had from VJ regarding Canadian source taxes and income and the 2555 and the 1116 for non-resident along with things from the IRS site.

But it was " oh no we don't need all that stuff" and all she did was photocopy my GC and proceed to fill out Lorry's taxes as married jointly

We both asked several times are you sure no forms for the Canadian income have to accompany the filing? She then said "okay let me call Allen, he's an expert on these situations".

So she calls Allen and explains to him that I have Canadian source income and taxes were paid in Canada and that I arrived in the U.S. in June with my Visa and married in July.

Allen asks if I had any U.S. income since coming here? " No he only has the Canadian income slips".

Allen then tells her no need to even show his income from outside the U.S just get his SSN and file normally as married jointly

Although they figured Lorry out for a nice big refund of $2800 we are both very doubtful of the whole filing process they did for us

Although we did get a free T-shirt and hat from them to wear in prison lol.lol

I wonder.....do these people at H & R block and the other places ever READ the instructions for the 1040???? The guy we used certainly acted surprised when I told him that what he gave us totally contradicted what I had read in the manual. He then went and talked to some colleagues and called me back and pretty sheepishly and in not very clear words said that he was wrong and I was right. He then added..."well, I was in the ballpark". Right......that's what we paid you $600 for, to be in the ballpark. Honestly, I could do a much better job than they did and should've but I have an infant to care for and don't have the time.

My best advice to everyone.....hire a tax professional that does this type of return on a daily basis and is truly an expert...the other big companies don't seem to have a clue.

[Flames9_RN 358]

Anyone know how long of a training course H&R block people go through? I heard it was only a few days!

[Chica Yeyé 41]

Anyone know how long of a training course H&R block people go through? I heard it was only a few days!

Actually 32 minutes, with 2 coffee breaks of 5 minutes each.