What are you guys doing for American income taxes?

[G&A 1]

Hi all,

I was wondering what all the married couples were is doing for taxes this year (US side). I currently live/work in Canada (non-resident alien) and my husband lives/works in the USA. I think that we will most likely be filing jointly. I read that if you made under $80,000 in Canada or Mexico, you can exclude it from income on your American tax return (but you cannot claim a foreign tax credit). If you include your income, you can claim a foreign tax credit as an itemized deduction. I am by no means an American tax expert. I welcome anyones insight.

Thanks

A

[Earmuffs 1]

good question..

Ive been thinking about taxes too.

[G&A 1]

Me and my husband spent hours reading over documents from the IRS. I am also just took an american tax course....and unfortunately there is no clear cut answer. Hopefully we will get some help here.

[Chica Yeyé 41]

Excellent question. No answer here - Hopefully ziggy will bring in his wisdom and to the point advise.

[trailmix 77]

Hi all,

I was wondering what all the married couples were is doing for taxes this year (US side). I currently live/work in Canada (non-resident alien) and my husband lives/works in the USA. I think that we will most likely be filing jointly. I read that if you made under $80,000 in Canada or Mexico, you can exclude it from income on your American tax return (but you cannot claim a foreign tax credit). If you include your income, you can claim a foreign tax credit as an itemized deduction. I am by no means an American tax expert. I welcome anyones insight.

Thanks

A

I'm absolutely sure zyggy will have a better answer, but anyway, when I filed the last 3 years I used the f2555ez, which enabled me to exclude my "foreign earned income of $82,400 or less" (that figure is the 06 figure).

However, that only applies to bona fide residents (you have probably already looked at this).

It almost sounds like, from their instructions, that you might not be able to claim this credit - I don't know if you have seen this tax guide, there is a flow chart on page 12 that might help?

Don't know if you have see the U.S./Canada Tax treaty documentation?

Edited December 11, 2007 by trailmix

[derekkj 0]

Just thinking about taxes gives me a headache! Last year's was a bit a of a nightmare since D had Canadian income earned in Canada, Canadian income earned in the US and US income earned in the US. Long story short, we hired an accountant. Who still has not billed us almost a year later. But that's another story.

Anyway, here is a link to another forum that specializes in US/CA tax issues. I have found it very helpful and at the very least someone there might be able to help out.

http://forums.serbinski.com/

[jonandmary 0]

If you file jointly, even though you are a non-resident alien you will be treated as a resident alien. Resident aliens are treated like Citizens in the fact that any (outside of US) is taxable. You would have to attach a statement to that effect.

EDIT - I TAKE THAT BACK ..... because you are not ending up as a resident by the end of 2007 it might change your eligibility.

Because of that I'd seriously recommend a competent tax professional. All of the sudden you are treated as something you are not so you are right in the fact that there is no clear cut answer to many things.

Besides your normal income is there any interest income or investments you would sell before moving?

Edited December 11, 2007 by jonandmary

[G&A 1]

If you file jointly, even though you are a non-resident alien you will be treated as a resident alien. Resident aliens are treated like Citizens in the fact that any (outside of US) is taxable. You would have to attach a statement to that effect.

EDIT - I TAKE THAT BACK ..... because you are not ending up as a resident by the end of 2007 it might change your eligibility.

Because of that I'd seriously recommend a competent tax professional. All of the sudden you are treated as something you are not so you are right in the fact that there is no clear cut answer to many things.

Besides your normal income is there any interest income or investments you would sell before moving?

I think you are correct. From what I understand, if we file jointly regardless of my residency I will be deemed to be a resident alien.

thanks for everyones help...what a mess!

[jonandmary 0]

I think you are correct. From what I understand, if we file jointly regardless of my residency I will be deemed to be a resident alien.

thanks for everyones help...what a mess!

I'm pretty sure too - I just threw in the EDIT because I re-read something and it looked like it also was assuming that you'd be a resident alien anyways by the end of the year.

I went through a few IRS publications to try to figure it out myself and I can't believe how crazy that is. I thought my taxes were complex being that I have a corporation, investments, property, etc.

[G&A 1]

I think you are correct. From what I understand, if we file jointly regardless of my residency I will be deemed to be a resident alien.

thanks for everyones help...what a mess!

I'm pretty sure too - I just threw in the EDIT because I re-read something and it looked like it also was assuming that you'd be a resident alien anyways by the end of the year.

I went through a few IRS publications to try to figure it out myself and I can't believe how crazy that is. I thought my taxes were complex being that I have a corporation, investments, property, etc.

Tell me about it! I am a Canadian Tax professional...and i started to take American tax courses to americanize my skills...and OMG its a totally different animal. Its so freaking complicated it makes our tax system look like a cake walk.

[thermophile 0]

If the Canadian makes less then $80k (outside of the US), I don't see any reason not to file jointly. You put both incomes in line 7(or there abouts) then deduct it all line 22ish with form 2555. So it's not a tax credit, but your US taxes are calculated as if both of you are living on the USC income. if you make more than that, you can probably afford to hire an accountant to help you out. my advice is only for those of us that are poor.

Edited December 11, 2007 by thermophile

[Jeremy + Kristy 0]

I'm taking mine to the tax guy around the corner from me who does both US and Canadian taxes.

[jonandmary 0]

If the Canadian makes less then $80k (outside of the US), I don't see any reason not to file jointly. You put both incomes in line 7(or there abouts) then deduct it all line 22ish with form 2555. So it's not a tax credit, but your US taxes are calculated as if both of you are living on the USC income. if you make more than that, you can probably afford to hire an accountant to help you out. my advice is only for those of us that are poor.

The way I always thought about it - is if you are not a USC or Resident Alien and you don't work (can't legally anyways) that you don't file a tax return. I don't comprehend how the IRS would even keep track of a non-resident alien with out a SSN. If you are a Resident Alien it is just like you are a citizen to the IRS and you would have to claim income regardless of where you made it.

If you were living together and you could use the joint filing to work out you stated, and then take benefit of the added dependent as a tax break.

It's a tax credit because you are adding in the income made in CA, then counting the fact that taxes were already imposed on that income - nullifying the need for further taxation on the CAC's claimed income. I'm assuming they'd be at a lower tax rate in the US - even taxable income over 188k (joint) is at 33% which I imagine is less than what it would be up in CA.

[thermophile 0]

The way I always thought about it - is if you are not a USC or Resident Alien and you don't work (can't legally anyways) that you don't file a tax return. I don't comprehend how the IRS would even keep track of a non-resident alien with out a SSN. If you are a Resident Alien it is just like you are a citizen to the IRS and you would have to claim income regardless of where you made it.

actually that's the opposite of what I meant. I'm assuming that you are the USC and your spouse is the non-citizen for this: you're married and your spouse makes less than $80k outside of the US. If your spouse doesn't have an SSN, you'll need to get an ITIN from the IRS for the spouse. Then you file jointly, with your combined income on line 7ish, then exclude the first $80k using form 2555.

If you were living together and you could use the joint filing to work out you stated, and then take benefit of the added dependent as a tax break.

you don't have to live together, just being married is good enough for the IRS

It's a tax credit because you are adding in the income made in CA, then counting the fact that taxes were already imposed on that income - nullifying the need for further taxation on the CAC's claimed income. I'm assuming they'd be at a lower tax rate in the US - even taxable income over 188k (joint) is at 33% which I imagine is less than what it would be up in CA.

it's not the same as the foreign tax credit because you are excluding foreign income from your taxable income instead of deducting the amount of foreign tax from your tax liability.

[Chica Yeyé 41]

I'm taking mine to the tax guy around the corner from me who does both US and Canadian taxes.

I will do exactly the same thing. It's way too insane for me to try and figure it out on my own - tax language is one I will never understand!

I guess it will be another year of HR Block for us.