First time U.S tax return jointly or separately

sunflower101 · Post by **sunflower101** » Fri Apr 22, 2016 3:22 pm

Hi Nelsona,

Posting it as a separate topic now.

I moved to U.S with a TN on May, 2015. My family moved on July 2015 with TD. This is the first time I am filing U.S tax. Should I file jointly or separately? Which is applicable and optimized for me. Pls let me know if you need additional inputs.

Thanks

nelsona · Post by **nelsona** » Fri Apr 22, 2016 4:04 pm

I've posted on this several times. Please research.
Likely full year 1040 joint using 2555 to exempt your Cdn wages will work best.

sunflower101 · Post by **sunflower101** » Fri Apr 22, 2016 5:39 pm

Thanks.

- Gone through related 2555 posts. So, I have to report my canadian wage in 2555. I will report my rental income in schedule C. I was using turbo tax and it does not allow me to use 2555 based on bonafied president test or physical presence test. Rather it is asking me to use 1116. Am I doing something wrong? I moved in may 2015.

- My wife's only cqnadian income was child care benefits. I guess she has to do 2555 or 1116 for that too. Am I right?

nelsona · Post by **nelsona** » Fri Apr 22, 2016 9:17 pm

TurboTax can't cover everything.
you do qualify under BOTH tests, but physical presence for sure (may 2014-May 2015)
only wages are covered on 2555. 1116 for all other Cdn income.

sunflower101 · Post by **sunflower101** » Fri Apr 22, 2016 10:27 pm

Thanks.

Few points:

- Trying to understand the actual impact of form 2555 in my case. Because if my canadian income was 40k from Jan 2015 to April 2015. I add this in line 7 (wages) of 1040. And then then again add as -40k on line 21. Then Neither I am paying any additional tax to U.S nor my tax bracket goes higher. Am I right?

Because max for 2015 is 100800. My exclusion is 100800 x (240 days/365 days)= 66k. And lower is 40k. So, exclusion is 40k.

- My wife needs to do 1116 to report the child care benefits. Am I right?

nelsona · Post by **nelsona** » Fri Apr 22, 2016 11:17 pm

How is your exclusion 240 days? You left in May. That's 120 day/365.

And when you use 2555 you do a different tax calculation, so you probably will owe US yaxes on your Cdn wages, but it will still give a better result than filing dual-status, which is the only goal of this exercise.

I answered the other question already.

I'll leave you to it. It's april 21st, not January 21st.

sunflower101 · Post by **sunflower101** » Tue Apr 26, 2016 5:21 pm

- For 2555, I should report net income or gross income? Form says total income, bit confused here.

- My wife is going to file 1116 for child care benefits. She had no other income so she paid 0 tax on it in Canada. So, I guess her foreign tax credit is 0. When we put this benefit amount (around $1700) as other income in 1040, it reduces refund by around $300. Not sure if we are doing it right or optimized way. Need your opinion.

Thanks.

nelsona · Post by **nelsona** » Wed Apr 27, 2016 12:32 am

That income is taxable in US, so since you don't have any credit against it, it increases your US tax.

ruib77 · Post by **ruib77** » Wed Apr 27, 2016 12:44 am

I was checking other posts. If I did not get it wrong, in one post you were mentioning "some part" of child care benefit is taxable. How do I calculate that portion?

I found I have a very small amount of Canadian interest/dividend income. Can I put it as other income in 1040 without 1116?

Thanks

nelsona · Post by **nelsona** » Wed Apr 27, 2016 1:35 am

The same portion that was taxable in Canada is taxable in US. Your T slip will indicate this.

Whether you want to claim the foreign tax credit on 1116 is completely up to you., but you must report and pay tax on all Cdn taxable income on your 1040.

ruib77 · Post by **ruib77** » Wed Apr 27, 2016 9:13 pm

Asking in this thread because I have similar question. I still need bit clarification for these two items:

1. For form 2555, should I report my T4's total / gross income or just the taxable income. If it is taxable income then how I will find taxable income from T4?

2. For UCCB, how do I find the taxable part? RC 62 only has only one box (10), which is the total benefit paid.

Thanks.

nelsona · Post by **nelsona** » Wed Apr 27, 2016 10:38 pm

You would report on 2555 the same income you reported on the line 7 of your 1040 for your WAGES, which is always gross wages.

CRA has explanations for what is taxable, You have to report it on your CDn return, after all. I'm sure you can figure this out.

nelsona · Post by **nelsona** » Wed Apr 27, 2016 10:40 pm

Box 10 is 100% taxable in Canada and US.

sunflower101 · Post by **sunflower101** » Fri Apr 29, 2016 3:18 pm

I guess form 2555 does not hamper the Child tax credit ($2000 for two kids) on line 52. It only hampers If someone is doing 8882 ( Additional child tax credit) on line 67. Am I right?

nelsona · Post by **nelsona** » Fri Apr 29, 2016 5:21 pm

Correct