The IRS/CRA Income Tax Thread

[zyggy 9]

This is seriously how I feel right now!

Just when I thought I had it all figured out too!

Ok, so I'm trying to fill out the 1116. I can't even figure out how to fill that thing out! Is it suppose to be hard to fill out?

I can't find the 2555. Is it the -T or -S? I see both in Turbo Tax and click on them but it won't pull up the form. If the 1116 is giving me this much trouble, I don't even know if I want to see the 2555.

I realized when I was starting to do these (or attempt anyway) that I don't have SSN's for our kids! I have no idea how I let that one slip by. How long does it usually take to get them? Will I get them in time to file by the deadline??

It says that we can file for EIC. I haven't seen that mentioned on here and wanted to make sure I wasn't missing something before I file for that.

And is there anything special about the state tax or do we just file that as normal? Are there extra forms for that, do we have to include anything else?

I keep seeing that turbo tax is suggested on here. Will I be able to fill it out completely with this situation and not have to paper file?

More confused than ever!

Nope.. both forms are easy to fill out. I have no idea what a T or an S are.. There's a Form 1116 for a Trust (T), an Estate (S?) and for an individual. You want the individual. For the 2555 there's the regular form and the EZ. YOu should only need the EZ.

Definitely need SSN's for the kids. Probably take about a month to get. So you're close. You can always file for an extension and then file until you get them. BUt you need to estimate how much you may owe and then send a check in before April 15th.

You should be able to efile using Turbotax. You may not have the right version to support you though. For the 1116 and 2555, you need their highest personal version. (Premier I think)

I don'tknow what your state requires. Each state is different, but you'll be filing a part year resident return of some kind.

[mwinburn 0]

Okay, I'm having a bit of trouble with the 1116 versus 2555 thing as well. Here's a quick summary of how I'm using each, and the line I'm stuck on.

Wife had employment in Canada through April. We put all of that income on 2555, which adds to my wages shown on my 1040, line 7. I then get a credit for it on the 2555. I believe that part looks right, though it does decrease my refund by a few hundred dollars, which I wasn't expecting.

Wife also received EI after coming to the States. That income went on the 1116 (and does not add to my wages shown on my 1040, line 7). I ran this through TurboTax twice and got two different values for the foreign tax credit. Apparently the discrepancy involves 1116, line 3d. So, my question is simple - should that number be only the amount of the EI, or should it include EI and employment wages for my wife?

I believe it should only be EI, as the wages are already included on 1040, line 7, but TurboTax has the most confusing description for how that line works, and I'm confused.

Thanks!

[zyggy 9]

Okay, I'm having a bit of trouble with the 1116 versus 2555 thing as well. Here's a quick summary of how I'm using each, and the line I'm stuck on.

Wife had employment in Canada through April. We put all of that income on 2555, which adds to my wages shown on my 1040, line 7. I then get a credit for it on the 2555. I believe that part looks right, though it does decrease my refund by a few hundred dollars, which I wasn't expecting.

Wife also received EI after coming to the States. That income went on the 1116 (and does not add to my wages shown on my 1040, line 7). I ran this through TurboTax twice and got two different values for the foreign tax credit. Apparently the discrepancy involves 1116, line 3d. So, my question is simple - should that number be only the amount of the EI, or should it include EI and employment wages for my wife?

I believe it should only be EI, as the wages are already included on 1040, line 7, but TurboTax has the most confusing description for how that line works, and I'm confused.

Thanks!

The instructions for the 1116 clearly state that you must include the excluded income from the 2555 as well as the foreign income included on the 1116 for Line 3d. You also include the 2555 income for calculating Line 3e.

Edited March 10, 2009 by zyggy

[rentua 0]

Well, here’s my situation:

I’m a US citizen and married my Canadian wife on 1/20/08.

She entered the US on 12/7/08 under a CR1 and lives in the US full time. She has her SSN now.

She works as a teacher in Windsor and continues to commute across the border to Windsor everyday for work.

So here are my questions:

US taxes:

1. I believe she can file with me as MFJ because she passes the Green card test. Is this correct?

2. I think I need to report all world-wide income and take the Foreign Earned Income exclusion. Is that correct?

3. How do I enter her T4 information in TurboTax?

4. How do I check whether it’s better to take the deduction or credit in TurboTax?

Can taxes (QuickTax):

1. What is my wife considered for tax purposes? Non-resident? Deemed resident? Deemed non-resident? She paid her rent up through the end of Dec 2008. I tried using all ways in QuickTax and I end up owing a lot when I choose Non-resident.

2. What is her tax home? Would it be Canada since she works there full time?

3. What is the “leaving Canada” tax form? How do I file it?

These are questions I have for now. I’m sure there will be additional ones later on. I’d rather not pay someone to do this for me, but I’m really struggling with all of this.

Thanks.

[zyggy 9]

Well, here's my situation:

I'm a US citizen and married my Canadian wife on 1/20/08.

She entered the US on 12/7/08 under a CR1 and lives in the US full time. She has her SSN now.

She works as a teacher in Windsor and continues to commute across the border to Windsor everyday for work.

So here are my questions:

US taxes:

1. I believe she can file with me as MFJ because she passes the Green card test. Is this correct?

2. I think I need to report all world-wide income and take the Foreign Earned Income exclusion. Is that correct?

3. How do I enter her T4 information in TurboTax?

4. How do I check whether it's better to take the deduction or credit in TurboTax?

Can taxes (QuickTax):

1. What is my wife considered for tax purposes? Non-resident? Deemed resident? Deemed non-resident? She paid her rent up through the end of Dec 2008. I tried using all ways in QuickTax and I end up owing a lot when I choose Non-resident.

2. What is her tax home? Would it be Canada since she works there full time?

3. What is the "leaving Canada" tax form? How do I file it?

These are questions I have for now. I'm sure there will be additional ones later on. I'd rather not pay someone to do this for me, but I'm really struggling with all of this.

Thanks.

US

1) Yes.

2) No.. She can only exclude the income that was earned before she got her green card. Everything after her green card requires using the foreign tax credit

3) As normal wage income.

4) You have to do multiple scenarios and see which one works best.

Canada.

1) She was a Canadian resident up to the day she got her Green Card. She's a non-resident after that.

2) Canada was her tax home up to the day she got her green card. The US was her tax home after that. Did she notify her employer so they take non-resident tax out?

3) A leaving Canada return is a T1 with the date she left Canada put in the first page. It's filed to the international tax services office, so she cannot e-file. Just to let you know, QuickTax does not support what we need to do.

Edited March 11, 2009 by zyggy

[rentua 0]

Well, here's my situation:

I'm a US citizen and married my Canadian wife on 1/20/08.

She entered the US on 12/7/08 under a CR1 and lives in the US full time. She has her SSN now.

She works as a teacher in Windsor and continues to commute across the border to Windsor everyday for work.

So here are my questions:

US taxes:

1. I believe she can file with me as MFJ because she passes the Green card test. Is this correct?

2. I think I need to report all world-wide income and take the Foreign Earned Income exclusion. Is that correct?

3. How do I enter her T4 information in TurboTax?

4. How do I check whether it's better to take the deduction or credit in TurboTax?

Can taxes (QuickTax):

1. What is my wife considered for tax purposes? Non-resident? Deemed resident? Deemed non-resident? She paid her rent up through the end of Dec 2008. I tried using all ways in QuickTax and I end up owing a lot when I choose Non-resident.

2. What is her tax home? Would it be Canada since she works there full time?

3. What is the "leaving Canada" tax form? How do I file it?

These are questions I have for now. I'm sure there will be additional ones later on. I'd rather not pay someone to do this for me, but I'm really struggling with all of this.

Thanks.

US

1) Yes.

2) No.. She can only exclude the income that was earned before she got her green card. Everything after her green card requires using the foreign tax credit

3) As normal wage income.

4) You have to do multiple scenarios and see which one works best.

Canada.

1) She was a Canadian resident up to the day she got her Green Card. She's a non-resident after that.

2) Canada was her tax home up to the day she got her green card. The US was her tax home after that. Did she notify her employer so they take non-resident tax out?

3) A leaving Canada return is a T1 with the date she left Canada put in the first page. It's filed to the international tax services office, so she cannot e-file. Just to let you know, QuickTax does not support what we need to do.

Thanks zyggy!

I have some follow-up questions:

1. I'm finished inputting into QuickTax and they want to know what my net income is as her husband. Since I didn't work in Canada and didn't live in Canada, do I just put Zero?

2. Plus, it wants to know what "Amounts included on your spouse's tax return". Once again, what do I put?

3. Also, I know now that I can't e-file, but can I still use QuickTax and then just mail it in?

Thanks.

[rentua 0]

Sorry, I have more questions:

1. For the US taxes, what do I put when they ask this:

"2008 Foreign Earned Income Excluded Less Related Deductions"

"Total Foreign Earned Income Less Related Deductions"

What deductions are they referring to?

2. How do I exclude the income she earned before she got her green card?

3. Do I just put enter her income from line 14 on her T4 (in USD)? Is that the only entry under the W2 section?

Thanks.

[childress_london 3]

I am doing an amended tax return to change from filing single to married/joint along with applying for a tax ID number. My question is do I need to attach my original tax return to the amended return?

[mwinburn 0]

Sorry, I have more questions:

1. For the US taxes, what do I put when they ask this:

"2008 Foreign Earned Income Excluded Less Related Deductions"

"Total Foreign Earned Income Less Related Deductions"

What deductions are they referring to?

2. How do I exclude the income she earned before she got her green card?

3. Do I just put enter her income from line 14 on her T4 (in USD)? Is that the only entry under the W2 section?

Thanks.

1) Heh, I got stuck on the same question. I believe, in English, that means you put the amount excluded with the 2555 on the first line, and then the total of the amount excluded on 2555 plus the amount listed as the other foreign income on the 1116. So if you had 5k in income on the 2555 and 10k on the 1116, those lines would be 5k and then 15k. Deductions would be things like Housing that you pay that is related to your employment or things like that. We didn't end up having any deductions, but if you do, you just use them to reduce those two values.

2) Exclusions happen on 2555. 1116 is for tax credit. So for us, the income she earned in Canada before moving here went on the 2555. After moving to the States, she has only received EI, which went on the 1116. If your wife has other income, say from an American company, that wouldn't show up on either form, as it'd be W2 or 1099 type stuff.

3) Any income she received after entering the US doesn't go on the T4, I believe. See previous comment on W2 or 1099.

Edited March 12, 2009 by mwinburn

[naviomelo 0]

Hi, I have a few questions. A pretty standard scenario, but I'm lost.

I moved from Canada to the US on a K-1 in October 2008. We got married in October 2008. I have Canadian employment income from January-October of 2008, then EI payments that I received after I was in the United States. I don't have a green card yet; the interview for that is later this month.

1. Where is the link to find the proper Canadian T1 form that I have to fill out?

2. Am I a non-resident, a deemed non-resident, or what?

3. Do I add my employment income to the EI income and submit all that, or does the EI income not need to be reported because the non-resident tax has already been deducted?

4. After I send this tax return to Canada CRA, do I ever have to correspond with them again?

5. What forms do I need for my US return? My wife didn't work in 2008 and all we have for income is interest income, capital gains (stock market), and the EI I received from Canada after I moved here.

Thank you so much for the help!

[SaysWho 3]

I have read this entire thread over twice and I think most of my questions have been answered – many, many thanks!! But there are a couple of things I’m not completely sure on, so I would like to confirm those things, (please be patient and forgive me for wanting to confirm things that may be clear to others) and I have a few questions that don’t seem to be answered here.

First, my 2008 situation

– Married Nov/07 and I maintained residence in Canada until GC received Dec. 9/08

– income for 2008 was all from Canada (self employment net $15,000, small amount CPP survivors pension, a small amount of investment interest, and $33,000 cashed in RRSPs early in 08)

– only tax withheld was 20% of RRSP withdrawl amount

– no US income at any time in the year

So, my assumptions for Canadian tax – are these correct?

– file a “Leaving Return” and elect to use Section 217 (I’m sure 217 will be most beneficial)

– all non-refundable tax credits and personal exemptions can be used at 100% because I’ll be using 217 and all income was Canadian anyway (I just write a note stating over 90% was Canadian…, etc.)

– I use a Non-Resident T1 General with a T2203 for provincial tax

So, my assumption for US tax – is this correct?

– for our US return we file 2555 to exclude my income while Canada was my tax home (Jan 1 to Dec 9) and a 1116 to take a Foreign Tax Credit on the one CPP benefit income amount ($480) that I received in Dec. after my GC date when US was my tax home (non-resident tax was not withheld on that $480 Dec. amount)

So, a couple of questions -

– I think the following excerpt from the CRA non-resident guide means because my income was from my own small business I DO NOT calculate the non-resident Surtax , but complete a T2203 to pay Provincial tax on ALL income instead. Is that correct?

Line A - Surtax for non-residents of Canada and deemed residents of Canada

You pay this tax instead of a provincial or territorial tax. If you did not have a business with a permanent establishment in Canada, follow the instructions at line A on the back of Schedule 1 to calculate this surtax.

If you had income from a business with a permanent establishment in Canada, you have to pay provincial or territorial tax on that income. Use Form T2203, Provincial and Territorial Taxes for 2008 - Multiple Jurisdictions, to calculate your provincial or territorial tax (except for Quebec). Attach a copy of the form to your return.

- Re: US tax returns – (In 2007 my US hubby filed MFS with my ITN and I only filed in Canada as I was only in US for a couple short visits and no US income.) For 2008 we are planning that I will file an Extension so I can wait to get my Canadian return dealt with, but due to an Offer in Comprimise a few years back my hubby cannot file for Extention, so he will file MFS by April 15, and then file an amendment later (after I receive my Canadian assessment, etc.) to change to MFJ, if most of my income can be excluded and it is to our benefit to file jointly…does that sound right?

Many thanks!

Annie

[daisylynn 0]

Oh great. We got the deluxe version. Well, this just sucks!

And I'm in need of some serious help (not as if I haven't needed so much help already ) I tried to follow the guide for forms 1116 and 2555 and it's like reading French. I don't know why I'm having such a hard time when others seem to be able to get it just fine. I just don't understand all the terminology and it's just plain confusing.

Is there someplace online that can walk me (in plain, easy-to-understand English) through the steps on those 2 forms? Or do I just need to have a tax preparer do them for us?

And to get the SSN's for the kids we have to first take them to the doctor (they haven't been since we've been here and getting records from Canada is such a hassle!) so that we have proof of ID. Grrrr, it's just keeps getting better.

I just want this to be over with already!

[mwinburn 0]

Oh great. We got the deluxe version. Well, this just sucks!

And I'm in need of some serious help (not as if I haven't needed so much help already ) I tried to follow the guide for forms 1116 and 2555 and it's like reading French. I don't know why I'm having such a hard time when others seem to be able to get it just fine. I just don't understand all the terminology and it's just plain confusing.

Is there someplace online that can walk me (in plain, easy-to-understand English) through the steps on those 2 forms? Or do I just need to have a tax preparer do them for us?

And to get the SSN's for the kids we have to first take them to the doctor (they haven't been since we've been here and getting records from Canada is such a hassle!) so that we have proof of ID. Grrrr, it's just keeps getting better.

I just want this to be over with already!

1116 was kinda tricky. Do you have TurboTax? If so, do the 2555 first, as you need some of that for the 1116. To get the 2555 filled our correctly, you need to convert the income and taxes from the T4 first. So make sure your numbers are in US dollars.

For 2555:

It's under Federal Taxes, Wages and Income, Less Common Income, Foreign Earned Income. However, you need to enter the income before you try to fill out the exclusion form. That income goes in Federal Taxes, Wages and Income, Less Common Income, Miscellaneous Income. Select the top box, "Wages not already reported". At the end, you'll be prompted to then fill out the exclusion form, which takes a little while. In the end, you have two numbers in the Wages and Income summary screen - mine was something like "5k" and "-5k", so they balanced out, even though my taxes due to the US changed.

For 1116

It's under Federal Taxes, Wages and Income, Less Common Income, Miscellaneous Income. Select the top box, "Other reportable income". Follow the wizard. Most of this one gets done automatically by TurboTax since it's numbers that come from other forms in your return. The only correct I had to make were on line 3, and I posted about that earlier.

Best of luck

[mwinburn 0]

I tried to edit my post and it timed out. I was going to add this:

Just for clarification, under Less Common Income, I have two numbers. Foreign Earned Income is a negative number that represents her total Canadian paycheck prior to moving to the States, -X. Under Miscellaneous Income, I have the total amount she received from Canadian sources, which were her job prior to moving here, and EI after moving here. That number is X + Y. In other words, I'm excluding X, and getting a tax credit on Y. X will be part of the number on your 1040, line 7 and part of the number on 1116, line 3e. X + Y also ends up on 1116, line 3d.

Hopefully that doesn't confuse you more

[Sprailenes 47]

I didn't live in Canada at all this year do I have to still fill this ####### out that they sent me?

I mean I'm just ready to photocopy everything and write in big black block letters: YOU DO IT!