The IRS/CRA Income Tax Thread

[zyggy 9]

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 ;-)

There are places and agencies that give pretty good tax advise for free.

[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 ;-)

There are places and agencies that give pretty good tax advise for free.

Really? Would you happen to have a list of those resources becuase we could sure use it right about now....thanks!

[LindaB 0]

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.

Would I still enter his income even if it is a non taxable disability pension in the U.S.?

Thanks for your help!

Linda

[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

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.

I do meet the substantial presence test, but I was a bona fide resident of Canada in 2008. Are you saying that I cant use form 2555?

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, 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.

I do meet the substantial presence test, but I was a bona fide resident of Canada in 2008. Are you saying that I cant use form 2555?

Sly

Hmmm.. I'm going to need to do further research...remember that a full day has to be a full day. Your travel days do not count. For instance if you entered the US on Friday and left on Sunday, only Saturday would count.

Edited January 27, 2009 by zyggy

[zyggy 9]

To expand on the above...

You must meet 3 tests to use the 2555. 1) You must be a bona fide tax resident of another country 2) You must the a citizen of a country that the US has a tax treaty with and 3) you must not meet the definition of a US Tax resident by the SUbstantial presence test. Remember for the substantial presence test, a full day has to be a full day. Your travel days do not count. For instance if you entered the US on Friday and left on Sunday, only Saturday would count.

[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.

Would I still enter his income even if it is a non taxable disability pension in the U.S.?

Thanks for your help!

Linda

Do you mean a disability pension provided by an employer or SSI from Social Security. There is a difference in how it is treated.

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 ;-)

There are places and agencies that give pretty good tax advise for free.

Really? Would you happen to have a list of those resources becuase we could sure use it right about now....thanks!

Your local society of AICPA would be a good place to start.

[LindaB 0]

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.

Would I still enter his income even if it is a non taxable disability pension in the U.S.?

Thanks for your help!

Linda

Do you mean a disability pension provided by an employer or SSI from Social Security. There is a difference in how it is treated.

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 ;-)

There are places and agencies that give pretty good tax advise for free.

Really? Would you happen to have a list of those resources becuase we could sure use it right about now....thanks!

Your local society of AICPA would be a good place to start.

It is SSDI from Social Security

[BH45 0]

Hi Zyggy

First let me say, thank you. This is a great thread.

Now, here's my dilema. My US hubby went ahead and filed his taxes. He filed jointly without having any of my information and he couldn't figure out how to enter Canada, so he input CA - which is California, right. He used Turbo Tax.

How do I fix this? I've been here since June 30/08. We went to Canada for 8 days at Christmas. I did come for a visit in March of 2008 and was here for 13 full days. I received income from my former work place in Canada until July 4 (they were paying out my vacation time) and then collected EI.

Any advice / help would be greatly appreciated.

[zyggy 9]

Hi Zyggy

First let me say, thank you. This is a great thread.

Now, here's my dilema. My US hubby went ahead and filed his taxes. He filed jointly without having any of my information and he couldn't figure out how to enter Canada, so he input CA - which is California, right. He used Turbo Tax.

How do I fix this? I've been here since June 30/08. We went to Canada for 8 days at Christmas. I did come for a visit in March of 2008 and was here for 13 full days. I received income from my former work place in Canada until July 4 (they were paying out my vacation time) and then collected EI.

Any advice / help would be greatly appreciated.

He filed already.. not good. You're going to have to amend your return to reflect your EI income and the foreign tax credit. YOu're probably not going to like the results. Don't file the amendment until after you get your refund back or you pay the balance due and get acknowledgement from the IRS.

BTW the IRS HATES amendments... and they let you know it.

Edited January 30, 2009 by zyggy

[jedinite 0]

To expand on the above...

You must meet 3 tests to use the 2555. 1) You must be a bona fide tax resident of another country 2) You must the a citizen of a country that the US has a tax treaty with and 3) you must not meet the definition of a US Tax resident by the SUbstantial presence test. Remember for the substantial presence test, a full day has to be a full day. Your travel days do not count. For instance if you entered the US on Friday and left on Sunday, only Saturday would count.

http://www.irs.gov/businesses/small/intern...=129390,00.html

So as a Greencard holder even if we have been a permanent resident for less than 31 days we must still file for taxes correct?

[jedinite 0]

To expand on the above...

You must meet 3 tests to use the 2555. 1) You must be a bona fide tax resident of another country 2) You must the a citizen of a country that the US has a tax treaty with and 3) you must not meet the definition of a US Tax resident by the SUbstantial presence test. Remember for the substantial presence test, a full day has to be a full day. Your travel days do not count. For instance if you entered the US on Friday and left on Sunday, only Saturday would count.

http://www.irs.gov/businesses/small/intern...=129390,00.html

So as a Greencard holder even if we have been a permanent resident for less than 31 days we must still file for taxes correct?

http://www.irs.gov/businesses/small/intern...=129391,00.html

Never mind. This link above clarifies everything.

Residency Starting Date Under the Green Card Test

If you meet the green card test at any time during a calendar year, but do not meet the substantial presence test for that year, your residency starting date is the first day in the calendar year on which you are present in the United States as a lawful permanent resident (the date on which the United States Citizenship and Immigration Services (USCIS) has officially approved your petition to become an Immigrant). If you receive your green card abroad, then the residency starting date is your first day of physical presence in the United States after you receive your green card. Section 7701(B)(1)(A)(i) of the Internal Revenue Code allows you to be treated as a resident alien for the entire calendar year if you were a Lawful Permanent Resident of the United States at any time during the calendar year if you have been present in the United States for at least one day during the calendar year.

Edited January 30, 2009 by jedinite

[LindaB 0]

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.

Would I still enter his income even if it is a non taxable disability pension in the U.S.?

Thanks for your help!

Linda

Do you mean a disability pension provided by an employer or SSI from Social Security. There is a difference in how it is treated.

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 ;-)

There are places and agencies that give pretty good tax advise for free.

Really? Would you happen to have a list of those resources becuase we could sure use it right about now....thanks!

Your local society of AICPA would be a good place to start.

It is SSDI from Social Security

Hi Ziggy, I think my reply to you the other day was lost in the shuffle, my husbands disability pension is SSDI from the state of Washinghton

Thanks

Linda

[Texanadian 10]

Treasury seems to have different exchange rates for CDN-USD money than the Federal Reserve listed earlier in this thread.

http://fms.treas.gov/intn.html#rates

1.1910

[zyggy 9]

To expand on the above...

You must meet 3 tests to use the 2555. 1) You must be a bona fide tax resident of another country 2) You must the a citizen of a country that the US has a tax treaty with and 3) you must not meet the definition of a US Tax resident by the SUbstantial presence test. Remember for the substantial presence test, a full day has to be a full day. Your travel days do not count. For instance if you entered the US on Friday and left on Sunday, only Saturday would count.

http://www.irs.gov/businesses/small/intern...=129390,00.html

So as a Greencard holder even if we have been a permanent resident for less than 31 days we must still file for taxes correct?

Yes, you pass the green card test.. you must file

Treasury seems to have different exchange rates for CDN-USD money than the Federal Reserve listed earlier in this thread.

http://fms.treas.gov/intn.html#rates

1.1910

That was the rate ON December 31. That is not the composite rate for 2008. The Federal reserve rate is the correct rate.