oh oh

[~Laura and Nick~ 5]

Gang,

What do I do???

Doing our taxes this year, Nick and I have discovered that we made a mistake on last years income tax.

Nick filed his taxes last year and included me on them. He never declared my Canadian income that I made prior to moving to the U.S. nor the Unemployment I collected after I had moved at the end of 2008. Neither of us knew anything about declaring world income........damn.

How should we approach this? Should we contact the IRS telling them we just discovered we made an error last year? I don't want this coming back to haunt us later on. It was a genuine mistake.

Any advice would be greatly appreciated.

[trailmix 77]

Hi Laura,

You are just going to need to file an amended return (same as you would in Canada). You will need to file the 1040X and include your income.

[~Laura and Nick~ 5]

Hi Laura,

You are just going to need to file an amended return (same as you would in Canada). You will need to file the 1040X and include your income.

Thank you hon.

I really know nothing about taxes. My dad always filed them for me.

I'll look into this. Will I have to file them with my taxes Nick and I are doing this week?

[Anh map 2,098]

Thank you hon.

I really know nothing about taxes. My dad always filed them for me.

I'll look into this. Will I have to file them with my taxes Nick and I are doing this week?

It's a separate tax return. Does not need to be filed at the same time as the 2009 return.

[~Laura and Nick~ 5]

It's a separate tax return. Does not need to be filed at the same time as the 2009 return.

Thank you muchly

[ozone_1974 1]

ok I am afraid I am in the same boat as Laura and Nick The only difference is that it happened for the 2009 taxes. We filed jointly and we did not declare my Canadian income for 2009 by pure mistake, we really did not know about it

So we have to file form 1040x .. We took a look at it and some of the terms they use for US taxes are not exactly the same as the ones on my T4 from Canada, (plus I have a T4 and RL-1, what is the difference ?) .. I really never did my own taxes and always had my accountant doing it for me, so I am completely confused. So how do we go about filing it ?

Second question .. are we actually going to pay taxes here in the States for the money I made in Canada (which is not a lot since I only worked a part of the year) ? It just seems like a nonsense to me when I do not even know yet if I will owe to Canada for 2009 taxes.

Thanks for any help

Edited April 6, 2010 by ozone_1974

[Inky 1,110]

I have seen people that have owed IRS tax from claiming canadian income, I myself did not owe anything and it didnt affect our tax return much. I only worked about 4 months in canada before I had moved tho. We had HR block do our taxes so we could avoid any mistakes doing it ourself and if they made mistakes they fix it for free.

T4 is a W2 you have to convert your canadian to american with the 2009 exchange rate. Not sure what a RL is tho, I had T3s etc and my T3 actually got us a 3,000$ credit for the next few years of taxes.

[ozone_1974 1]

Thanks a lot Inky, we'll try HR Block also and see if they can do the 1040x

Just seems weird to me to pay taxes in both countries .. but I guess it is what it is

I'll keep this post updated with the problem's solution, maybe it can help someone else in the future

[Kathryn41 3,205]

There is a tax treaty between US and Canada that prevents double taxation. You should take a look at the "Foreign Tax Credit" option which will basically cancel out any taxes you would pay to the US because you have already paid them in Canada. Is the RL for investment income? (I don't remember now ) . Investment income is handled separately from employment income in preparing US tax returns, although it is still covered by the Foreign Tax Credit.

What I found really useful is getting one of those big tax guides that are published at this time of year for around $20/25. The whole taxation system in the US is totally different than in Canada and it helped me gain a better understanding of the whole process, as well as helping us negotiate the World Income/double taxation/Foreign tax credit situation. I had both earned income and investment income. Because the exchange rate had varied so significantly during the year I moved I went back and found the actual exchange rate for each pay period and applied them individually to get a much more accurate account of what my income was in terms of US dollars. You should be fine taking the exchange rate for the year's end and applying it to your Canadian income to get the actual amount.

Last year we had to file an amended tax return as well as we had sold some land Joe owned in the early Spring and did not receive the tax statement about it until after we had filed our returns. It wasn't a problem - although we had to pay back some of the refund that we had received.

Edited April 6, 2010 by Kathryn41

[one_day_at_a_time 0]

A tax credit is available for on Foreign Earned Income (i.e. employment income), by filling out Form 2555. Credit is available for other types of income (i.e. UIC, RRSP, etc) by filling out Form 1116.

[ozone_1974 1]

Thanks so much Kathryn & one_day_at_a_time

Since we filed jointly this year, (my first year in U.S.A), will I be able to use the Foreign Tax Credit (is it form 1116 or 2555 ) ?

Also another question .. with the form 1040x (amended tax return), would we be able to switch from filing jointly to filing separately ? And what is best, filing jointly or separately ?

Edited April 6, 2010 by ozone_1974

[trailmix 77]

Read page 1 of the F2555 instructions - it has a little test to see if you are eligible to use the form. It is only for people who were bonafide residents of a foreign country / meet the physical presence test. I'm not familiar with the 1116 yet as I am ignoring our taxes right now

Filing jointly or separately depends on your personal tax situation. I have seen others suggest trying both scenarios to see which has the better outcome.

Good luck!

[ozone_1974 1]

Tanks a lot Trailmix, I will definitly take a closer look at that form

[Inky 1,110]

We did file one of thos at HR block not sure which one but I know she did one at my request. So far we got our fed return back, should get the state one in a couple days or so.

I thought I got papers today from CRA to file canadian leaving canada taxes but nope.. I get a bill for 62$ of GST that I supposedly " cashed and put in my bank account " Which I find funny cus I NEVER cashed it and I dont have a canadian Bank account. The Gov GST check is still in its envelope unopend and is being sent to them today by my mom back in canada. Starting to really get on my nerves.

[ozone_1974 1]

I thought I got papers today from CRA to file canadian leaving canada taxes but nope.. I get a bill for 62$ of GST that I supposedly " cashed and put in my bank account " Which I find funny cus I NEVER cashed it and I dont have a canadian Bank account. The Gov GST check is still in its envelope unopend and is being sent to them today by my mom back in canada. Starting to really get on my nerves.

I know exactly what you are saying Inky, I too received checks in the mail for a few (even though I told them I moved to USA) .. had to send them back each time. I hope they find out their mistake and correct it for you .. lots of frustrating times this year with taxes

So I received my taxes reports from my accountant in Canada this year. Basically he claimed my wife on it as I got married in 2009 and I receive taxes this year from Federal and provincial (which I was extremely surprised and was even wondering if it was right since I only worked 8 months in Canada in 2009). Any people receiving back taxes from the Gvt in Canada for 2009 taxes ? I mean is it normal, lol ?

Also I know I am not entitled to the GST returns they kept sending in the mail and I have to send them back, but am I entitled to have a tax return from Canada if I am not even allowed to get GST ?

Edited April 6, 2010 by ozone_1974