Tax Accountant Recommendations - California State with all Foreign Income

[CWiggin 10]

To start off I filed for an extension with my wife this year since my tax situation this year is a bit more complicated than I'm used to.

 

I'm looking for a recommended tax accountant who is well versed with large foreign income as both Non-Resident and Resident Alien filings with residency in California.  

 

The unique situation:

-Work takes place in Canada on a 2week in/out rotation.  My tax home is Canada with a Canadian employer (non-contract; permanent employee).  All work takes place on Canadian soil and no work takes place on US soil.

-Foreign Income is greater than the foreign income exclusion 104,100USD for 2018.  I have no US based income; wife has only US based income.

-Non Resident up to June15/18 and Green Card holder after.  
 

With being a green card holder I have to report all world income in USD equivalent.  I understand that an FBAR will be required for all my foreign accounts.  

I'm unclear on the best method to file given the situation and have played both with Married Filing Jointly and Separately in my software but get hung up with the foreign income part of things.  I've concluded I need some experienced assistance.

 

My initial understanding was that the tax treaty would protect me from being double taxed in the USA since Canadian taxes are higher than USA based taxes.  I have been using the Turbotax software like I have for the past decade and clearly I'm missing something.  I've explored forms 2555, 1116 and many different publications and seems I'm in a bind.

Please forward me any recommendations with applicable details.  I've started reaching out to some Expat style services to gauge how effective they'll be but would like some feedback from those who may be in a similar/same situation as me or know of an accountant well versed in the above.    

Edited April 21, 2019 by CWiggin

[Crazy Cat 41,351]

I just private messaged you with my accountant's info.

[ADW & JOP 146]

53 minutes ago, CWiggin said:

To start off I filed for an extension with my wife this year since my tax situation this year is a bit more complicated than I'm used to.

 

I'm looking for a recommended tax accountant who is well versed with large foreign income as both Non-Resident and Resident Alien filings with residency in California.  

 

The unique situation:

-Work takes place in Canada on a 2week in/out rotation.  My tax home is Canada with a Canadian employer (non-contract; permanent employee).  All work takes place on Canadian soil and no work takes place on US soil.

-Foreign Income is greater than the foreign income exclusion 104,100USD for 2018.  I have no US based income; wife has only US based income.

-Non Resident up to June15/18 and Green Card holder after.  
 

With being a green card holder I have to report all world income in USD equivalent.  I understand that an FBAR will be required for all my foreign accounts.  

I'm unclear on the best method to file given the situation and have played both with Married Filing Jointly and Separately in my software but get hung up with the foreign income part of things.  I've concluded I need some experienced assistance.

 

My initial understanding was that the tax treaty would protect me from being double taxed in the USA since Canadian taxes are higher than USA based taxes.  I have been using the Turbotax software like I have for the past decade and clearly I'm missing something.  I've explored forms 2555, 1116 and many different publications and seems I'm in a bind.

Please forward me any recommendations with applicable details.  I've started reaching out to some Expat style services to gauge how effective they'll be but would like some feedback from those who may be in a similar/same situation as me or know of an accountant well versed in the above.    

I had a very similar situation to you. I am also from Canada, filing jointly for the first time with my wife, with an income greater than the foreign income exclusion maximum for 2018.

 

I don't know if you have ever visited this site, I found it very helpful throughout this process. They are also connected to an accounting service, but I ended up going with an accountant that was highly recommended buy my wife's colleague. I liked him, but I won't recommend him to you because he doesn't have a whole lot of experience dealing with foreign taxes. I think he had to do a lot of research on his own.

 

After a long discussion with my accountant and through some research, for example, on taxact.com, my understanding is that you can still use the foreign income exclusion (Form 2555) to exclude up to $104,100 (for some reason, we did $103,900, not sure why?), and then use your foreign tax credits (only federal taxes, not provincial) on form 1116 to avoid dual taxation.

 

I still reside in Canada so am not a resident of California. My accountant tells me that I don't have to pay Californian state taxes as I did not reside there in 2018. I asked him what would happen in the future when I moved to California but do some locum work in Canada where I would have to pay provincial taxes and he told me that I cannot use provincial taxes to exclude state taxes. Again, I am not 100% sure this is accurate. I was going to do more research when I cross that bridge.

 

I ended up filing jointly (I needed the ITIN in order to get a head start to apply for a California medical license which takes 8-12 months), but because there was such a huge disparity between my salary and my wife's (I think I was 4 times her), we ended up getting less tax refund for my wife had she she filed separately, however, as mentioned I had other reasons to file jointly.

Edited April 21, 2019 by ADW & JOP

[CWiggin 10]

7 minutes ago, ADW & JOP said:

I had a very similar situation to you. I am also from Canada, filing jointly for the first time with my wife, with an income greater than the foreign income exclusion maximum for 2018.

 

I don't know if you have ever visited this site, I found it very helpful throughout this process. They are also connected to an accountant service, but I ended up going with an accountant that was highly recommended buy my wife's colleague. I liked him, but I won't recommend him to you because he doesn't have a whole lot of experience dealing with foreign taxes, and I think he had to do a lot of research on his own.

 

After a long discussion with my accountant and through some research, for example, on taxact.com, my understanding is that you can still use the foreign income exclusion (Form 2555) to exclude up to $104,100, and then use your foreign tax credits (only federal taxes, not provincial) on form 1116 to avoid dual taxation.

 

I still reside in Canada so am not a resident of California. My accountant tells me that I don't have to pay Californian state taxes as I did not reside there in 2018. I did ask him what would happen in the future when I moved to California but do some locum work in Canada and have to pay provincial taxes and he told me that I cannot use provincial taxes to exclude state taxes. Again, I will say that I am not 100% sure this is accurate. I was going to do more research when I cross that bridge.

 

I ended up filing jointly (I needed the ITIN in order to get a head start to apply for a California medical license which takes 8-12 months), but because there was such a huge disparity between my salary and my wife's (I think I was 4 times her), we ended up getting less of a tax refund for my wife had she filed separately, however, as mentioned I had other reasons to file jointly.

Thanks for the info, based on the workflow sheet I can't claim the FEIE since I have not been in the foreign country for 330days.  I work for 2 weeks in Canada and then return home for 2 weeks in the USA.  I definitely need a good accountant as you've added a couple informative points that I didn't know in regards to the federal/provincial tax aspect.

[ADW & JOP 146]

Just now, CWiggin said:

Thanks for the info, based on the workflow sheet I can't claim the FEIE since I have not been in the foreign country for 330days.  I work for 2 weeks in Canada and then return home for 2 weeks in the USA.  I definitely need a good accountant as you've added a couple informative points that I didn't know in regards to the federal/provincial tax aspect.

I just did some research on my own. From this website, I think this is what my accountant was alluding to.

 

Quote

State Treatment of Tax Treaties

The states are not bound to honor federal tax treaties, but most do. Those that do not (that we are aware of) are: 1) Alabama, 2) Arkansas, 3) California, 4) Connecticut, 5) Hawaii, 6) Kansas, 7) Kentucky, 😎 Maryland, 9) Mississippi, 10) Montana, 11) New Jersey, 12) North Dakota, and 13) Pennsylvania. If you live or work in one of these states, you will owe state income tax even though your income is exempt from federal income tax by a treaty.

 

[CWiggin 10]

9 minutes ago, ADW & JOP said:

I just did some research on my own. From this website, I think this is what my accountant was alluding to.

 

 

I have read that line about California as well which is why I'd like to find a solid accountant that HOPEFULLY knows of a way to avoid double tax in this regard.  

[ADW & JOP 146]

Just now, CWiggin said:

I have read that line about California as well which is why I'd like to find a solid accountant that HOPEFULLY knows of a way to avoid double tax in this regard.  

If you come across one or a strategy to avoid double taxation for state taxes, can you let me know?

[CWiggin 10]

Just now, ADW & JOP said:

If you come across one or a strategy to avoid double taxation for state taxes, can you let me know?

Will add the results here for sure and send you a message.  

[JP John 65]

I use Helena Ren and she knows her stuff and is very thorough.  Her firm is called CanAm and she is in Newmarket ON.  

[CWiggin 10]

19 hours ago, JP John said:

I use Helena Ren and she knows her stuff and is very thorough.  Her firm is called CanAm and she is in Newmarket ON.  

I've sent her an email as well thank you.