The IRS/CRA Income Tax Thread

[sly_wolf 199]

Hi Ziggy,

I have a few questions (hope it all makes sense!):

I am the Canadian, we got married in June 2007, and came here on my CR1 visa in July 2008. I still commute to work in Canada every day. My husband is the U.S. citizen and is on a non-taxable disability pension.

1. Last year when I was doing my Canadian 2007 taxes, I entered that I was married and put my husbands name and that he was a non-resident of Canada. I was told once that I would not enter his income in and then a tax place and someone at CRA told me I had to put it in and use the percentage to calculate from U.S. to Canadian. (I attached a letter to my income tax saying if I had done it wrong...explaining that is was a non-taxable pension to please correct it but I got back exactly what I had entered). Yesterday, I was talking to someone at a tax place and they said I should enter "zero" as his income as it is non-taxable. Is this right even in Canada? Is so, can I go back and get CRA to adjust my 2007 income tax return? Need to know for this year too.

2. If I will still be working in Canada, do I still have to fill out the "leaving Canada" form you were talking about in other posts? I know I would click on "no" in the "were you living in B.C. on Dec 31, 2008 etc.

3. Is Turbotax fairly easy to use to do your U.S. taxes if you are claiming forgein income etc? If so, I would rather do that than pay big bucks to a tax preparer.

Thanks so much for your help! (I am sure I will think of a "ton" more questions before I am finished...lol)

Hi Linda. You have asked some good questions. My situation will be similar to yours for 2009. This thread is also keeping Zyggy very busy. We all appreciate it very much.

I have run through turbo tax and it will do the job just fine.

Sly

[sly_wolf 199]

Zyggy, I used turbo tax to run through my 2 options - Foreign income exclusion versus Foreign tax credit. The Foreign Income exclusion works out much better for us for 2008.

I was a bit surprised to see that the Foreign tax credit was no where near as favourable.

I have a question related to form 2555 though. It asks for dates that I visited in the US. I visited my wife on weekends during 2008. Do I really have to list all these dates in 2008 or is this only done to determine any US income?

Sly

[Southern_Canadian 0]

Hey,

Great thread!!!

I have a few questions... I'll quickly explain my situation.

I worked in Canada all of 2008 till my move to the US which was in July of 2008. Since then, I have not worked and I do not recieve EI.

How do I go about doing my taxes??? I know that I will file one for Canada but do I add Eric on it aswell? Do I show his earnings for the year? OR just write his name to show that I am now married?

For the US taxes, what do I do???? Since I have not worked yet, do I just fill everything out with zero for earnings? OR am I able to file with Eric on his?

Last question, I am still waiting on my AP and EAD to apply for my SIN, will it be a problem that I don't have a SIN on my tax returns??

Sorry for so many questions, I just find all of this VERYYYY confusing! Any advice would be really appreciated!

Thanks!

[Darryl 0]

Hi all,

My wife (Canadian+US citizen) and myself (Canadian Green card holder) have been living in the USA for about 1.5 years now. Last year we filed both US and Canadian taxes because we had moved halfway through the year and had both Canadian and US income (from our jobs). This year we've both only got US income. So my question is this - at the beginning of 2008 I sold some RRSPs that I had from when we lived in Canada (to close out the Canadian account) When I did this I paid 25% right off the top as a 'non-resident tax'. So my questions...

1. Do I have to list that sale anywhere on my US return? If so, where?

2. Do I have to file a Canadian tax return reflecting that sale, and if so is there any tips on how to file that with no Canadian (job related) income (just US work income)?

I'm wondering if this is something I need to be really careful with or if I can just do the turbo tax straight return in the USA (we have nothing complicated other than this RRSP thing) not listing anything about the RRSPs as it was in Canada and than file a simple return in Canada just listing that RRSP sale - OR - if I need to go to a professional as this is super complicated?

If anyone can shed some light here I would appreciate it - I just don't want to get stuck paying some expensive accountant a ton of money if there is an easy way to do it on my own (if it's simple).

Thanks for you help (in advance).

Darryl

[zyggy 9]

Hi Ziggy,

I have a few questions (hope it all makes sense!):

I am the Canadian, we got married in June 2007, and came here on my CR1 visa in July 2008. I still commute to work in Canada every day. My husband is the U.S. citizen and is on a non-taxable disability pension.

1. Last year when I was doing my Canadian 2007 taxes, I entered that I was married and put my husbands name and that he was a non-resident of Canada. I was told once that I would not enter his income in and then a tax place and someone at CRA told me I had to put it in and use the percentage to calculate from U.S. to Canadian. (I attached a letter to my income tax saying if I had done it wrong...explaining that is was a non-taxable pension to please correct it but I got back exactly what I had entered). Yesterday, I was talking to someone at a tax place and they said I should enter "zero" as his income as it is non-taxable. Is this right even in Canada? Is so, can I go back and get CRA to adjust my 2007 income tax return? Need to know for this year too.

2. If I will still be working in Canada, do I still have to fill out the "leaving Canada" form you were talking about in other posts? I know I would click on "no" in the "were you living in B.C. on Dec 31, 2008 etc.

3. Is Turbotax fairly easy to use to do your U.S. taxes if you are claiming forgein income etc? If so, I would rather do that than pay big bucks to a tax preparer.

Thanks so much for your help! (I am sure I will think of a "ton" more questions before I am finished...lol)

[zyggy 9]

Hi Ziggy,

I have a few questions (hope it all makes sense!):

I am the Canadian, we got married in June 2007, and came here on my CR1 visa in July 2008. I still commute to work in Canada every day. My husband is the U.S. citizen and is on a non-taxable disability pension.

1. Last year when I was doing my Canadian 2007 taxes, I entered that I was married and put my husbands name and that he was a non-resident of Canada. I was told once that I would not enter his income in and then a tax place and someone at CRA told me I had to put it in and use the percentage to calculate from U.S. to Canadian. (I attached a letter to my income tax saying if I had done it wrong...explaining that is was a non-taxable pension to please correct it but I got back exactly what I had entered). Yesterday, I was talking to someone at a tax place and they said I should enter "zero" as his income as it is non-taxable. Is this right even in Canada? Is so, can I go back and get CRA to adjust my 2007 income tax return? Need to know for this year too.

2. If I will still be working in Canada, do I still have to fill out the "leaving Canada" form you were talking about in other posts? I know I would click on "no" in the "were you living in B.C. on Dec 31, 2008 etc.

3. Is Turbotax fairly easy to use to do your U.S. taxes if you are claiming forgein income etc? If so, I would rather do that than pay big bucks to a tax preparer.

Thanks so much for your help! (I am sure I will think of a "ton" more questions before I am finished...lol)

1. You are supposed to compute his income using the standard exchange rate (I have posted it on this thread) and report it on your return. You are correct in putting US Resident in where you put the SIN number.

2. Even though you are still working in Canada, you are no longer a resident of Canada. You need to file a leaving Canada return for this year, listing the date of your CR-1 as the date that you left Canada. However, I would actually File under Section 217 since you have earned income in Canada for the entire year. In future years, I believe you should file a non-resident return, unless there is something that could cause you to be a deemed resident of Canada (still own a house, etc.). I'm going to do some further research to confirm this.

3. In your case, I would pay for a well-qualified cross-border tax preparer to do your first year or two of your taxes. Once that is done and you get an understanding on how it works by asking your preparer lots of questions, you can use those returns as a guide and try to do them yourself. Cross border taxation, especially in your case when you live in one country and work in the other is no place where you want to do it yourself if you don't fully understand what you're doing.

[zyggy 9]

Hey,

Great thread!!!

I have a few questions... I'll quickly explain my situation.

I worked in Canada all of 2008 till my move to the US which was in July of 2008. Since then, I have not worked and I do not recieve EI.

How do I go about doing my taxes??? I know that I will file one for Canada but do I add Eric on it aswell? Do I show his earnings for the year? OR just write his name to show that I am now married?

For the US taxes, what do I do???? Since I have not worked yet, do I just fill everything out with zero for earnings? OR am I able to file with Eric on his?

Last question, I am still waiting on my AP and EAD to apply for my SIN, will it be a problem that I don't have a SIN on my tax returns??

Sorry for so many questions, I just find all of this VERYYYY confusing! Any advice would be really appreciated!

Thanks!

I have answered these questions previously on this thread. Please read through it and if you have any further questions, I would be happy to answer them.

[zyggy 9]

Hi all,

My wife (Canadian+US citizen) and myself (Canadian Green card holder) have been living in the USA for about 1.5 years now. Last year we filed both US and Canadian taxes because we had moved halfway through the year and had both Canadian and US income (from our jobs). This year we've both only got US income. So my question is this - at the beginning of 2008 I sold some RRSPs that I had from when we lived in Canada (to close out the Canadian account) When I did this I paid 25% right off the top as a 'non-resident tax'. So my questions...

1. Do I have to list that sale anywhere on my US return? If so, where?

2. Do I have to file a Canadian tax return reflecting that sale, and if so is there any tips on how to file that with no Canadian (job related) income (just US work income)?

I'm wondering if this is something I need to be really careful with or if I can just do the turbo tax straight return in the USA (we have nothing complicated other than this RRSP thing) not listing anything about the RRSPs as it was in Canada and than file a simple return in Canada just listing that RRSP sale - OR - if I need to go to a professional as this is super complicated?

If anyone can shed some light here I would appreciate it - I just don't want to get stuck paying some expensive accountant a ton of money if there is an easy way to do it on my own (if it's simple).

Thanks for you help (in advance).

Darryl

1. Yes, you must report the sale of the RRSP's as a pension distribution on a 1040. You take the 25% non-resident tax as a foreign tax credit. You also must file the form to report the RRSP amount that I mentioned earlier in this thread (the number escapes me right now)

2. You have no obligation to file any return with Canada as they took out the non-resident tax.

Hey,

Great thread!!!

I have a few questions... I'll quickly explain my situation.

I worked in Canada all of 2008 till my move to the US which was in July of 2008. Since then, I have not worked and I do not recieve EI.

How do I go about doing my taxes??? I know that I will file one for Canada but do I add Eric on it aswell? Do I show his earnings for the year? OR just write his name to show that I am now married?

For the US taxes, what do I do???? Since I have not worked yet, do I just fill everything out with zero for earnings? OR am I able to file with Eric on his?

Last question, I am still waiting on my AP and EAD to apply for my SIN, will it be a problem that I don't have a SIN on my tax returns??

Sorry for so many questions, I just find all of this VERYYYY confusing! Any advice would be really appreciated!

Thanks!

You will not be able to file until you have a SSN, if you don't have it by April 15, file for an extension with the IRS.

[KiKi 0]

My husband worked for Canada Post for several years and this past year he cashed out his pension. He was taxed 25% by Canada.

When filing our taxes this year (married/joint) where do we claim this money?

Do we have to claimm this money???

Is there a way to exempt this money (and if so, which form) because the taxes have been aid to CANADA

If we can, in fact, exempt this money, but still have to claim it.....will it count towards our total income for the year (and therefore losing us the EIC?)

thank you very much.

[Darryl 0]

Hi all,

My wife (Canadian+US citizen) and myself (Canadian Green card holder) have been living in the USA for about 1.5 years now. Last year we filed both US and Canadian taxes because we had moved halfway through the year and had both Canadian and US income (from our jobs). This year we've both only got US income. So my question is this - at the beginning of 2008 I sold some RRSPs that I had from when we lived in Canada (to close out the Canadian account) When I did this I paid 25% right off the top as a 'non-resident tax'. So my questions...

1. Do I have to list that sale anywhere on my US return? If so, where?

2. Do I have to file a Canadian tax return reflecting that sale, and if so is there any tips on how to file that with no Canadian (job related) income (just US work income)?

I'm wondering if this is something I need to be really careful with or if I can just do the turbo tax straight return in the USA (we have nothing complicated other than this RRSP thing) not listing anything about the RRSPs as it was in Canada and than file a simple return in Canada just listing that RRSP sale - OR - if I need to go to a professional as this is super complicated?

If anyone can shed some light here I would appreciate it - I just don't want to get stuck paying some expensive accountant a ton of money if there is an easy way to do it on my own (if it's simple).

Thanks for you help (in advance).

Darryl

1. Yes, you must report the sale of the RRSP's as a pension distribution on a 1040. You take the 25% non-resident tax as a foreign tax credit. You also must file the form to report the RRSP amount that I mentioned earlier in this thread (the number escapes me right now)

2. You have no obligation to file any return with Canada as they took out the non-resident tax.

Thanks for your help on this Zyggy! I have a couple more questions - you mention that I have to report the sale on a 1040 - do I have to report the full amount withdrawn or just the gains (total amount when we left Canada - value when cashed out)? It seems like if we put the entire sale amount in TurboTax it calculates our refund as if it's taxing that whole amount as additional income and says we have to pay like 25%-30% of the total amount - which I don't see as being possible considering we already paid the 25% non-resident tax.

I hope this isn't getting too detailed but would it be possible to provide some details on how to record all of this in TurboTax (or can it be done in TurboTax)? As for the form you mentioned - were you talking about the 1116 or 8555? Can this be done in TurboTax as well?

Thanks again - your help is greatly appreciated

Darryl

[sly_wolf 199]

Zyggy,

If I meet all of the other requirements, can I still use Form 2555 if I visited the US on a regular basis (ie weekends) during 2008?

Sly

[zyggy 9]

Zyggy,

If I meet all of the other requirements, can I still use Form 2555 if I visited the US on a regular basis (ie weekends) during 2008?

Sly

Yes

[zyggy 9]

My husband worked for Canada Post for several years and this past year he cashed out his pension. He was taxed 25% by Canada.

When filing our taxes this year (married/joint) where do we claim this money?

Do we have to claimm this money???

Is there a way to exempt this money (and if so, which form) because the taxes have been aid to CANADA

If we can, in fact, exempt this money, but still have to claim it.....will it count towards our total income for the year (and therefore losing us the EIC?)

thank you very much.

You must claim it all since it was pre-tax money in the pension. You must fill out Form 8891 which will direct you to place the appropriate amount on Line 16 of the 1040. Remember to convert the amount to US Dollars. You can take a foreign tax credit on the distribution using Form 1116.

Yes, it does count in your total income and it will be used in determining if you are eligible for the EIC. You should have received advise from a tax professional before you cashed it out and you could have avoided these issues.

Zyggy,

If I meet all of the other requirements, can I still use Form 2555 if I visited the US on a regular basis (ie weekends) during 2008?

Sly

Yes, I wouldn't think weekend visits would trip the substantial presence test that would make you a tax resident of the US and therefore ineligible to use the 2555.

[zyggy 9]

Hi all,

My wife (Canadian+US citizen) and myself (Canadian Green card holder) have been living in the USA for about 1.5 years now. Last year we filed both US and Canadian taxes because we had moved halfway through the year and had both Canadian and US income (from our jobs). This year we've both only got US income. So my question is this - at the beginning of 2008 I sold some RRSPs that I had from when we lived in Canada (to close out the Canadian account) When I did this I paid 25% right off the top as a 'non-resident tax'. So my questions...

1. Do I have to list that sale anywhere on my US return? If so, where?

2. Do I have to file a Canadian tax return reflecting that sale, and if so is there any tips on how to file that with no Canadian (job related) income (just US work income)?

I'm wondering if this is something I need to be really careful with or if I can just do the turbo tax straight return in the USA (we have nothing complicated other than this RRSP thing) not listing anything about the RRSPs as it was in Canada and than file a simple return in Canada just listing that RRSP sale - OR - if I need to go to a professional as this is super complicated?

If anyone can shed some light here I would appreciate it - I just don't want to get stuck paying some expensive accountant a ton of money if there is an easy way to do it on my own (if it's simple).

Thanks for you help (in advance).

Darryl

1. Yes, you must report the sale of the RRSP's as a pension distribution on a 1040. You take the 25% non-resident tax as a foreign tax credit. You also must file the form to report the RRSP amount that I mentioned earlier in this thread (the number escapes me right now)

2. You have no obligation to file any return with Canada as they took out the non-resident tax.

Thanks for your help on this Zyggy! I have a couple more questions - you mention that I have to report the sale on a 1040 - do I have to report the full amount withdrawn or just the gains (total amount when we left Canada - value when cashed out)? It seems like if we put the entire sale amount in TurboTax it calculates our refund as if it's taxing that whole amount as additional income and says we have to pay like 25%-30% of the total amount - which I don't see as being possible considering we already paid the 25% non-resident tax.

I hope this isn't getting too detailed but would it be possible to provide some details on how to record all of this in TurboTax (or can it be done in TurboTax)? As for the form you mentioned - were you talking about the 1116 or 8555? Can this be done in TurboTax as well?

Thanks again - your help is greatly appreciated

Darryl

See my reply above, the full amount must be claimed as it was a tax sheltered account. I do not believe you are going to be able to file using TurboTax as Form 8891 is very likely not supported by TurboTax (It's not the most used Form). GO to their website and see which if any version supports this form. YOu will have to use 1116 to take the foreign tax credit.

Edited January 26, 2009 by zyggy

[KiKi 0]

Yes, it does count in your total income and it will be used in determining if you are eligible for the EIC. You should have received advise from a tax professional before you cashed it out and you could have avoided these issues.

Thank you for your reply.

The fact that I asked about the EIC should answer the question about hiring proffessional help....in and of itself ;-)