The IRS/CRA Income Tax Thread

[FireKari 4]

I can see that.

BTW - thank you for answering my questions earlier, that helped us a lot. =)

[Inky 1,111]

Hi thanks for answering earlier zyggy! I'm curious about the non-resident state return.

Is it possible to file a non-resident state return if you own a home in Nebraska? I know I left that out earlier but I didn't know you could do something like file two state returns.

How does it work filing joint Idaho and non-res Nebraska returns? Could you explain it in laymans terms for my understanding? if its to long to explain thats fine don't bother lol.

[zyggy 9]

Hi thanks for answering earlier zyggy! I'm curious about the non-resident state return.

Is it possible to file a non-resident state return if you own a home in Nebraska? I know I left that out earlier but I didn't know you could do something like file two state returns.

How does it work filing joint Idaho and non-res Nebraska returns? Could you explain it in laymans terms for my understanding? if its to long to explain thats fine don't bother lol.

Federal law states that the state that the servicemember is a resident of at the time of the start of their service is their state of residence, no matter if they purchase a house, etc. However, at any time that servicemember may opt to change their state of residence. A lot of military members change their state of residence to a state that has no income tax as soon as they are stationed there, i.e. Texas, Washington, Florida, etc. This protection is also afforded to the servicemember's spouse and minor children. Therefore, your residence is Idaho and not Nebraska. See the following from the Publication from the Nebraska Department of Revenue, Nebraska Income Tax for Military Servicemembers (their Spouses)

Servicemember and Spouse. An individual's legal residence is the same as his or her place of domicile. The place of residence at the time of entry into the service is presumed to be the state of legal residence and remains so until legal residence in another state is established. Military assignments do not affect the servicemember's or spouse's domicile. No change of legal residence (domicile) results from moving to a new location for a limited period of time, such as under a temporary duty (TDY) assignment. A permanent change of station (PCS) order also does not automatically change legal residence. Physical presence in a state by the servicemember does not necessarily establish domicile in that state.

Because of certain federal law restrictions, Nebraska's six-month automatic residence provision does not apply to the military servicemember or spouse. The military servicemember or spouse, however, may choose to change his or her legal residence. Unless the servicemember or spouse produces adequate evidence, and has the intent to change his or her legal residence (see Change of Legal Residence below), the Servicemembers Civil Relief Act prevents a change in legal residence solely because of physical presence in a state.

A spouse with the same legal residence in another state as the servicemember, who has been required to file as a Nebraska resident in prior tax years, does not have to file as a resident for 2009 or later years because of changes in federal law. To receive a refund of Nebraska income tax withholding, file Form 1040N and Schedule III as nonresidents. On line 66 of Schedule III enter zero and write "Exempt Nonresident Military Spouse" on the line provided. Contact your state of legal residence regarding filing and estimated tax requirements. The tax returns for prior years cannot be amended to nonresident returns because the federal law changes are not retroactive.

So in your case, if you had Nebraska tax withheld from your employer, you will need to file a Nebraska Return and file as a non-resident. You will get all the income tax from Nebraska witheld back. File a Nebraska Nonresident Employee Certificate, Form 9N with your employer and they will stop witholding Nebraska tax. See if they will withold Idaho tax for you. If they are a national employer, they should have no problem with that. If your national employer will not withhold Idaho taxes, you will have to pay estimated taxes on your income to Idaho each quarter. Use Idaho tax form 40V to do so.

You will now have to file an Idaho return as a resident and declare the income you earned in Nebraska as Idaho income. Since you most likely did not pay estimated taxes to Idaho, expect to be writing them a check for the taxes on your earnings.

Zyg

Edited February 17, 2011 by zyggy

[lilacvioletiris 11]

Definitely going to be reading through this thread. Waiting for my husband's T1's from his last employer.

Does Service Canada send a T1 for employment insurance income?

[Kukolka 8]

Just making sure I have this straight, because I've read the instructions but it seriously seems like cheating!! BTW, I've always done my taxes by hand, not using any program, just the instructions. My husband has an SSN and we're married filing jointly. We can elect to have him treated as a resident alien for all of 2010. And using the 2555-EZ exclude all of his foreign-earned income, which is all of his income, as it's been taxed by Canada. AND I can file the Schedule M, "Making Work Pay", because I've earned an appropriate amount of income in the US for that. And because we're married filing jointly, we get the $800 credit, rather than me getting the $400 as the only one with US income.

[Kathryn41 3,205]

Okay well I think I have a few thngs settled in my brain about filing taxes this year. I left Canada in Dec 0f 2010 and I worked right up until end of November, so I will be filing an...exit tax return. Question: My daughter 18 years in March of 2010, lived with me...so I can claim her equal to dependant I believe. how does that jive with me being married in Dec of 2010 to my usc, fiance....? Do I just indicate married and thats it or...?

Also since we were married in Dec of 2010, my now usc husband - we will file married-jointly...and use forms 2555 and 1116 to exclue foreign income...?

Any part of this make sense or am I way off here!

Thanks Everyone!

Read over the link FireKari provided to the "Emigrants and Taxes" from Canada Revenue Agency - you will find it will answer a lot of your questions about filing your Canadian return. Basically, you treat your 'exit' return the same way as you would a regular return for the Province in which you lived, except that you would include the date you left Canada - eg. December 1, 2010. Your return addresses your financial situation at that time, so you were not married when you left Canada, so you would put unmarried as you got married after that date

Zyggy should be able to answer your question about your daughter.

One other thing - if you had no income from anywhere other than Canada after you left Canada, you should attach a note to your returns providing the statement that more than 90% of your world income was Canadian based income,and that you wish to claim a full year's Federal tax credit as allowed (and identified in the Emigrants and Taxes booklet.). Your income to November 30 was all that you earned for the year (any EI claims are also Canadian sourced income) so you are eligible. What will happen otherwise is that they will pro-rate your Federal tax credits to when you left the US and only provide you with 11/12th of the credits (until November 30). You are asking them to provide you with 12/12s as you qualify to have your partial year Canadian income treated as if it were a full year's income.

Filing jointly, married on your US returns, you would use the Foreign Tax Credit to claim your Canadian taxes as a credit on your US return as you will be declaring your Canadian income as a deemed resident for the full year. Be sure to prepare your Canadian return first so you will know exactly what tax credit amount to claim. I'm sorry, I don't remember the number of the form.

Edited February 26, 2011 by Kathryn41

[coldwatersurf 5]

You don't need to file anything in Canada. HRSDC already took the 25% non-resident tax out. You must claim the EI income, but you can take the 25% non-resident tax as a Foreign Tax Credit using Form 1116.

CRA and IRS do talk to each other. If you don't claim your income and the IRS finds out some day, you will get charged the tax you would owe, plus penalties and interest from April 15 2011.

So i spoke to my tax acct. unfortunately, the guy that helped me last year doesnt work at the office anymore so someone else is helping me and she has talked to other offices near the border regarding my taxes. They said It is voluntary to file my T4E b/c it is "passive" income (it is 4K & 1K in taxes)??? and I dont need to ammend my taxes to include my T4E. Is this right? ...... she also said, if i ammend my taxes, my income would increase and I will end up paying IRS even with 1116. I stayed in US all year. I have no ties to canada. But, this is confusing. i thought I had to report all world wide income. Is this true that its voluntary? if it is, i'd rather not report it since the best situation for me is not to file it.

[coldwatersurf 5]

bump

[jken 2]

Thanks everyone for the guidance with this topic. I have read the Canadian revenue agency site as well, but cannot confirm one thing and am hoping that someone could chime in.

Left Canada in Dec if 2010. My daughter who turned 18 in March of 2010; lived with me - she graduated in June of 2010. Can I claim her = to a dependant and if so how do I know how much I can claim her for.???

Thanks in advnace!

[J & J 3]

Hello All,

Got a few tax questions that ya'll might be able to help me with:

Just so you know I arrived in the U.S with my k-1 visa in Sept 2010. got married in Nov 2010. and just recieved my Green Card this past Feb 2011.

-For my Canadian Taxes on the T1 form where it asks about my information on the left, is that considered the exit return (final return) everyone is talking about? (Asking about residence).

-I have not changed my last name with my Canadian Taxes or SIN card.. What name should I put down? my maiden name or married name? Should I try to change it before I file? They already know I moved.

-To the right of the T1, it asks for information about my spouse. Do I put his SSN in the spot it asks for his SIN number? Do I put down his American Net income for 2010 in that spot? Or do i label not married on my 2010 return?

Also…

-For the U.S tax return, Where can I find the Foreign income Credit form? What's the number of the form?

If I got this all correct, I file in Canada my exit return, file in U.S as joint married with my husband with a Foreign income credit form? That way they will not credit me twice, just on my Canadian income return?

Thanks for the Help!!

[zyggy 9]

So i spoke to my tax acct. unfortunately, the guy that helped me last year doesnt work at the office anymore so someone else is helping me and she has talked to other offices near the border regarding my taxes. They said It is voluntary to file my T4E b/c it is "passive" income (it is 4K & 1K in taxes)??? and I dont need to ammend my taxes to include my T4E. Is this right? ...... she also said, if i ammend my taxes, my income would increase and I will end up paying IRS even with 1116. I stayed in US all year. I have no ties to canada. But, this is confusing. i thought I had to report all world wide income. Is this true that its voluntary? if it is, i'd rather not report it since the best situation for me is not to file it.

No it is not voluntary. Income is income whether it is passive or not and must be reported.

[zyggy 9]

Thanks everyone for the guidance with this topic. I have read the Canadian revenue agency site as well, but cannot confirm one thing and am hoping that someone could chime in.

Left Canada in Dec if 2010. My daughter who turned 18 in March of 2010; lived with me - she graduated in June of 2010. Can I claim her = to a dependant and if so how do I know how much I can claim her for.???

Thanks in advnace!

You can claim her this year as a qualifying child if she lived with you for more than half the year or attended school, she will not qualify as a qualifying child next year unless he is a student.

However, next year, she may qualify as a qualifying relative if you meet those tests. See Publication 17 for more information on the qualifying relative tests.

Rules for Qualifiying Child.

Relationship

• Your son, daughter, adopted child¹, stepchild, foster child² or a descendent of any of them such as your grandchild
• Brother, sister, stepbrother, stepsister or a descendant of any of them such as a niece or nephew

<LI>Age. At the end of the filing year, your child was:

• Younger than you (or your spouse if married filing jointly) and
  • younger than 19, or
  • younger than 24 and a full-time student

  [*]Any age if permanently and totally disabled³

<LI>Residency

• Child must live with you in the United States⁴ for more than half of the year.

<LI>Joint Return

• The child cannot file a joint return for the year, unless the child and the child's spouse did not have a filing requirement and filed only to claim a refund.

[Love_Young 0]

I have posted this before in another tax thread and of my own thread. Still not getting my questions answered.

So I will post it in the last tax thread in hopes that somewhere I will get some answers.

I am the US citizen but I am living with my husband in Canada with him. (Have been for two years)

I haven't earned any worldwide income and we got married in May 2010.

He is not immigrating to the US but we are currently awaiting Canada's decision on our application for me to immigrate there.

I just now found out that I need to file a US tax return since I got married last year. I have never filed a US tax return before because it wasn't needed.

Now I am not sure what forms I need to fill out, where to mail it to, etc. I am planning on filing as "married filing separately" since my husband doesn't have an ITIN or SSN. And I know that I should fill out the spot as NRA or NR in the spot where it asks for his SSN number. And I will include a letter explaining our situation.

I just want to make sure I am going about things in the right way.

Here are my questions:

1. Usually when you applied as "married filing separately" you would both be filing separately but my husband doesn't need to, will he get in trouble for that later on?

2. What address do I mail the return to?

3. How long does it take to get a reply back about it?

4. Do I apply with my address from the US or here in Canada?

5. What forms do I need to mail since I am living abroad with my husband?

6. What is tax with-holding?

7. My income is zero, how would I fill this out?

8. Will my husband's income play a factor into my return?

9. Will I get a refund even with no income, if so would they mail it abroad and could I still cash it here?

I know we got to get this done soon so I would appreciate any answers/tips you can give to us soon. I just don't want to get in trouble later on down the line and looking for a fairly simple way about this. Looking forward to your responses. Thank you!

[zyggy 9]

I have posted this before in another tax thread and of my own thread. Still not getting my questions answered.

So I will post it in the last tax thread in hopes that somewhere I will get some answers.

I am the US citizen but I am living with my husband in Canada with him. (Have been for two years)

I haven't earned any worldwide income and we got married in May 2010.

He is not immigrating to the US but we are currently awaiting Canada's decision on our application for me to immigrate there.

I just now found out that I need to file a US tax return since I got married last year. I have never filed a US tax return before because it wasn't needed.

Now I am not sure what forms I need to fill out, where to mail it to, etc. I am planning on filing as "married filing separately" since my husband doesn't have an ITIN or SSN. And I know that I should fill out the spot as NRA or NR in the spot where it asks for his SSN number. And I will include a letter explaining our situation.

I just want to make sure I am going about things in the right way.

Here are my questions:

1. Usually when you applied as "married filing separately" you would both be filing separately but my husband doesn't need to, will he get in trouble for that later on?

2. What address do I mail the return to?

3. How long does it take to get a reply back about it?

4. Do I apply with my address from the US or here in Canada?

5. What forms do I need to mail since I am living abroad with my husband?

6. What is tax with-holding?

7. My income is zero, how would I fill this out?

8. Will my husband's income play a factor into my return?

9. Will I get a refund even with no income, if so would they mail it abroad and could I still cash it here?

I know we got to get this done soon so I would appreciate any answers/tips you can give to us soon. I just don't want to get in trouble later on down the line and looking for a fairly simple way about this. Looking forward to your responses. Thank you!

If you had no income, then you don't need to file a return. As long as your spouse is not a US Permenent Resident or a US Citizen, you don't need to include him on a US tax return and your income stands on it's own. If you didn't work, you are below the filing threshold and are not required to file.

[Inky 1,111]

When can we request our tax transcripts from the IRS? we just filed today March 17th. Picked electronic filing. So wait 2 weeks then get the last 2 years tax transcripts from the IRS?