2010 Tax thread - For Canada and the U.S.

[NBtoPitt 2]

Hey everyone, after completing my taxes this year a question popped into my head. Because I'm a type I diabetic, here in Canada I qualify for the disability tax credit which gives me around $15k every year for both my Canada and Provincial taxes. Is there a similar program in the US? I know that we'll have some tax breaks anyway due to my husband being a full-time student, but right now a lot of the jobs that I'm looking at and are eligible for pay anywhere between 50-80k a year, and if I get a higher paying one I'd really like to keep some of those taxes to help re-pay his student loans and such.

[Udella&Wiz 325]

You may be able to get a portion of the 25% back by filing a Section 217 return (basically the income is less than the 25% tax bracket). Don't let the CRA keep money that they have no right in keeping.

Also note that you have to file that section 217 before a certain date...I cannot remember...but it might be prior to the end of June 'I think'

[trailmix 77]

Does anyone who's done the filing of the Canadian Tax returns since coming here give me an idea on how long it took them to complete your return? Basically I just wanted to know if it takes longer because of "not" residing in Canada.

Yes, it does take longer than say efiling in Canada. I believe ours took 2 months to be processed.

Edited February 21, 2010 by trailmix

[Kathryn41 3,205]

Hey everyone, after completing my taxes this year a question popped into my head. Because I'm a type I diabetic, here in Canada I qualify for the disability tax credit which gives me around $15k every year for both my Canada and Provincial taxes. Is there a similar program in the US? I know that we'll have some tax breaks anyway due to my husband being a full-time student, but right now a lot of the jobs that I'm looking at and are eligible for pay anywhere between 50-80k a year, and if I get a higher paying one I'd really like to keep some of those taxes to help re-pay his student loans and such.

I'm Type 1 diabetic as well. I never qualified for the disability tax credit while in Canada (rats!) and I definitely don't qualify for the very limited disability support for taxes here in the US. Here is a link to the IRS listing of what is available for a disability tax credit: http://74.125.47.132/search?q=cache:XPM4en...=clnk&gl=us .

The US has a lot fewer 'social' types of programmes or services than are available in Canada, and they don't generally 'give' away anything. In the few cases when they do it is usually only available to US citizens or long term permanent residents.

You should expect your medical expenses to increase substantially in the US even with a very good health plan. You will need to do co-pays for all of your doctor's visits and prescriptions. I am actually paying more in my copays for my diabetes medication than I was paying for the full medication in Canada (prior to health care reimbursement by my employer). Lots of people need to make profit off of my medical condition - and they do. It's a different world .

You can claim medical expenses as a deduction but in order to qualify based on the IRS criteria you need to be really low income or facing some sort of catastrophic event like open heart surgery (many plans have you responsible for 10 - 20% of hospitalization costs). If you get a job between 50-80 K a year it is highly unlikely you will ever be able to claim your regular medical expenses as a deduction.

[NBtoPitt 2]

I'm Type 1 diabetic as well. I never qualified for the disability tax credit while in Canada (rats!) and I definitely don't qualify for the very limited disability support for taxes here in the US. Here is a link to the IRS listing of what is available for a disability tax credit: http://74.125.47.132/search?q=cache:XPM4en...=clnk&gl=us .

The US has a lot fewer 'social' types of programmes or services than are available in Canada, and they don't generally 'give' away anything. In the few cases when they do it is usually only available to US citizens or long term permanent residents.

You should expect your medical expenses to increase substantially in the US even with a very good health plan. You will need to do co-pays for all of your doctor's visits and prescriptions. I am actually paying more in my copays for my diabetes medication than I was paying for the full medication in Canada (prior to health care reimbursement by my employer). Lots of people need to make profit off of my medical condition - and they do. It's a different world .

You can claim medical expenses as a deduction but in order to qualify based on the IRS criteria you need to be really low income or facing some sort of catastrophic event like open heart surgery (many plans have you responsible for 10 - 20% of hospitalization costs). If you get a job between 50-80 K a year it is highly unlikely you will ever be able to claim your regular medical expenses as a deduction.

They just added type I diabetes to the list of disabilities in 2006 or 2007 I believe, because it was the first year I was allowed to claim. I didn't expect to pay more for my supplies with health insurance from my husband though That is actually very scary. Do you mind sharing how much it is, or how much more than it was in Canada?

[Wis-Can 0]

Yes, it does take longer than say efiling in Canada. I believe ours took 2 months to be processed.

Two months isn't isn't too bad. I can handle that. I figured it might be one of those 4+ months thing before you heard anything. Thanks Trailmix.

[BH45 0]

You may be able to get a portion of the 25% back by filing a Section 217 return (basically the income is less than the 25% tax bracket). Don't let the CRA keep money that they have no right in keeping.

Example, please....

[supremecomplex 8]

I've looked through this whole thread & still need help with what to do.

I came & entered the States on December 30th, 2009. My whole income is Canadian based. From then, I haven't worked a day yet since I've been in the US. What I initially was going to do was file my residence as Manitoba (as that's where I'm from) where it says where is your place of residence on December 31, 2009 & then just e-file it with QuickTax since I have my NetFile code, as I've done in the past. But now that I've read this, I'm totally unsure. I have no clue how to file taxes via paper.

Would I be able to file online & netfile on QuickTax? Or would I have to mail in my information? & if I had to mail it in, where would I mail it to? Would I have to send the letter as well? SO CONFUSED! Help!

Edited February 22, 2010 by supremecomplex

[trailmix 77]

You are considered a resident of Canada for 2009, you can just go ahead and efile as you normally would.

[zyggy 9]

I'm Type 1 diabetic as well. I never qualified for the disability tax credit while in Canada (rats!) and I definitely don't qualify for the very limited disability support for taxes here in the US. Here is a link to the IRS listing of what is available for a disability tax credit: http://74.125.47.132/search?q=cache:XPM4en...=clnk&gl=us .

The US has a lot fewer 'social' types of programmes or services than are available in Canada, and they don't generally 'give' away anything. In the few cases when they do it is usually only available to US citizens or long term permanent residents.

You should expect your medical expenses to increase substantially in the US even with a very good health plan. You will need to do co-pays for all of your doctor's visits and prescriptions. I am actually paying more in my copays for my diabetes medication than I was paying for the full medication in Canada (prior to health care reimbursement by my employer). Lots of people need to make profit off of my medical condition - and they do. It's a different world .

You can claim medical expenses as a deduction but in order to qualify based on the IRS criteria you need to be really low income or facing some sort of catastrophic event like open heart surgery (many plans have you responsible for 10 - 20% of hospitalization costs). If you get a job between 50-80 K a year it is highly unlikely you will ever be able to claim your regular medical expenses as a deduction.

Unless you sign up for a Flex Spending Plan (Cafeteria Plan) that uses pre-tax dollars to pay for medical expenses.

I've looked through this whole thread & still need help with what to do.

I came & entered the States on December 30th, 2009. My whole income is Canadian based. From then, I haven't worked a day yet since I've been in the US. What I initially was going to do was file my residence as Manitoba (as that's where I'm from) where it says where is your place of residence on December 31, 2009 & then just e-file it with QuickTax since I have my NetFile code, as I've done in the past. But now that I've read this, I'm totally unsure. I have no clue how to file taxes via paper.

Would I be able to file online & netfile on QuickTax? Or would I have to mail in my information? & if I had to mail it in, where would I mail it to? Would I have to send the letter as well? SO CONFUSED! Help!

Actually this is what my wife did, she entered the US on December 30th. File your 2009 return as your Leaving Canada return. Makes it much cleaner for the next year.

[zyggy 9]

Example, please....

Here's a simple one...

Okay... let's say you earned $10,000 in Canada based income and Canada took 25% of that for the non-resident tax meaning you would pay $2,500 in tax to Canada your proceeds would be $7,500

Let's say for argument that you also earned $10,000 in the US in addition to the $10,000 Canada source income of $20,000 total and the Canada tax bracket for that $20,000 is 10%... so if you lived in Canada, you would only pay $2,000 in tax if that entire income was earned in Canada.

What a Section 217 return does is it allows you to prove that you only need to pay the 10% and not the 25%. In the above example, CRA would send you a refund for $500.

The return is due by June 30

Edited February 23, 2010 by zyggy

[Hugglebuggles 60]

I'm sure this has been covered before, so forgive me if someone has asked in this thread and I just glazed over it.

We're filling out the forms for our US tax return and the husband and I are filling jointly. I didn't make any money in the US this year, but I worked for the first part of the year in Canada so I have some Canadian income. On the tax form where it asks for my income, do I put $0 since I made no money in the US, or do I put the income I made in Canada?

[zyggy 9]

I have a question about residency status for my Leaving Canada return. I have been reading income

tax guides, previous threads & playing around with Ufile to see if it fits my needs. So confused.

I became a PR of the United States in December 09. Moved to the US on K 1 visa in September of 09. Obviously spent more than 183 days in Canada. However I cannot be a PR of the US & file as a resident (for tax purposes) in Canada!? Guess I cannot file as a non resident and still get full exemption & tax credits using 90% rule? I had NO canadian or US income after I moved to the US in September.

Is it possible to file as a deemed resident of Canada & it NOT affect my PR status in the USA?

I know I cannot claim SK provincial territorial credits but I worked for 8 months in Canada in 2009 & also cashed out a public employees pension. So the provincial tax still comes into play.

I'm thinking it's too late to file an NR73!

HELP!

Never ever ever ever never ever ever file a NR73 until the CRA asks you to file one. If you do, you're only painting yourself into a corner. I can't say it more strongly.

I'm sure this has been covered before, so forgive me if someone has asked in this thread and I just glazed over it.

We're filling out the forms for our US tax return and the husband and I are filling jointly. I didn't make any money in the US this year, but I worked for the first part of the year in Canada so I have some Canadian income. On the tax form where it asks for my income, do I put $0 since I made no money in the US, or do I put the income I made in Canada?

You would not put 0, but would exclude the Canadain income. Please read the entire thread, the answer is here.

Edited February 23, 2010 by zyggy

[zyggy 9]

Here's a simple one...

Okay... let's say you earned $10,000 in Canada based income and Canada took 25% of that for the non-resident tax meaning you would pay $2,500 in tax to Canada your proceeds would be $7,500

Let's say for argument that you also earned $10,000 in the US in addition to the $10,000 Canada source income of $20,000 total and the Canada tax bracket for that $20,000 is 10%... so if you lived in Canada, you would only pay $2,000 in tax if that entire income was earned in Canada.

What a Section 217 return does is it allows you to prove that you only need to pay the 10% and not the 25%. In the above example, CRA would send you a refund for $500.

The return is due by June 30

On the flip side, let's say you earned $10,000 in Canada source income and Canada took the $2,500 in non-resident tax and you earned $50,000 in the US. In this case, if you filled out a T1 for your worldwide income, you would be in a bracket above the 25% non-resident tax rate. So it is better to let them keep their 25% and walk away. However, be sure to report the $10,000 Canada source income on the 1040 and take the $2,500 as a foreign tax credit using Form 1116.

[Hugglebuggles 60]

Ok, so I read it. I apologize for being lazy! I don't do my own taxes, I never have and never will, but my husband insists in doing them himself, which means I need to trust him to file for us both. This question was courtesy of him and I assumed he had read the thread when he asked me to post in it.

Anyways... This is what I've gathered. Please correct me If I'm wrong.

Ok well, I found our joint return for 2008 and we DID use the F2555!

It's really a pretty straight forward return - the 1040 and a 2555, that's it. Claimed my Husband's total income (foreign and U.S.) on line 7 - noted form 2555 on line 21 and deducted his Canadian income for a gross total of U.S. income only on line 22.

They accepted this return, I could not swear in a court of law that I actually did it right.

I think I should get out of this thread before I get thrown out

So, I should put my foreign Canadian income on line 7 as if it is normal earned income, then fill out form F2555 to exclude it. I'm eligible for it based on this bellow- since I lived in Canada for the entire period spanning March 2008 and March 2009 correct? I moved out of Canada in June of 2009.

And then for US only income on line 22 it would be $0 since I didn't make any money in the US.

Exactly. If she lived in Canada for 330 days between March 2008 and March 2009, she can use the 2555 for January to March 2009.

5) EI and Pension Income are not earned income and therefore cannot be excluded using Form 2555. However, you can get a foreign tax credit on this income using Form 1116.

I also have a small pension income from January to July of 2009. Would that be included in the income I'm claiming on line 7? I believe since EI income is included (as someone stated earlier) a pension income would as well. Should I fill out form 1116 in conjunction with form 2555? Is that permitted?

Thanks for the help!!

Edited February 23, 2010 by Hugglebuggles