Hi, Nelson, I am using TurboTax for my 2005 US return. As you may remember, I did not earn two much last year ( last two month in USA about 17500) plus (US$ 3600 Canada EI).
Quesiont 1: If I input a fake SSN for my wife and child ( as they do not have one now) , I found TurboTax generated about $2000 EIC, plus $1000 child credit. Do we qualify for this if we claim Treaty article XXV?
Question2 : If we qualify, I know I will attach W7 for ITIN with my return. How can handle their SSN in the 1040? leave it blank? Or "Applying ITIN"? Same questions for state TAX.
Question3: I did input foreign income ( Canada income). TurboTax still generated 1040A for me instead of 1040. Is this right?
Question4: For a state TAX, will the Treaty XXV apply? That is can I treat myself as a whole year resident in that state like I can treat my family as a whole yeare US resident?
Question5: Shall I include Canada income as a State Income?
Thank you very much!
Do Canadians qualify for EIC ( Earned Income Credit)?
Moderator: Mark T Serbinski CA CPA
As long as both you and our spouse report all income in 2005 on your 1040, you are entitled to all the credits and deductions available to any other US filer, including EIC and child credit. (note that there might be a requirement that your child actually reside in US or be a US citizen to qulaify, check that out).
as to 1040A, i suspect that once you include any foreign tax credit request, it will bump to a 1040. I'm sure you can override if you wish, although 1040A is quite acceptable.
Your state doesn't follow the treaty, but I'm quite sure that you MUST file as part-year,since you only moved into the state part-yar, just like as one moving from any other state. All states have part-year forms, which allow you to report only the income earned while in that state. urbotax may or may not understatnd this, but you can take that up with Intuit.
as to 1040A, i suspect that once you include any foreign tax credit request, it will bump to a 1040. I'm sure you can override if you wish, although 1040A is quite acceptable.
Your state doesn't follow the treaty, but I'm quite sure that you MUST file as part-year,since you only moved into the state part-yar, just like as one moving from any other state. All states have part-year forms, which allow you to report only the income earned while in that state. urbotax may or may not understatnd this, but you can take that up with Intuit.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
I just read PUB596 Page 7, no, we can't get EIC.
" You cannot get the EIC if, instead of an SSN, you (or your spouse, if filing a joint return) have an individual taxpayer identification number (ITIN). ITINs are issued by the Internal Revenue Service to noncitizens who cannot get an SSN."
I guess this article overule this Treaty. I will keep reading other publications and let you know. Thanks.
I guess this article overule this Treaty. I will keep reading other publications and let you know. Thanks.
ONE WORLD
Interesting.
In general IRS regualtions NEVER overrule the treaty.
However in this case, article XXV would not apply as they are not strictly stating that US citizens are allowed one thing and foreigners are not. They are merely saying that you must have a valid SSN.
The unusual requirement for a valid SSN successfully circumvents the treaty, as there is nothing in the tax treaty (nor the social security agreement) which would force issuance of an SSN to Cdns in your situation. There are very few instances in the tax system where an ITIN is not equivalent to an SSN, and this is clearly one of them.
I should also point out that since your child does not have an SSN and did not live in US for half the year (and thus would have no qualifying children), you would have to have lived in the US more that half the year to qualify qualify for EIC.
Looks like EIC is not in the cards for you.
You might still be entitled to the Child tax credit (I would apply for it and see).
In general IRS regualtions NEVER overrule the treaty.
However in this case, article XXV would not apply as they are not strictly stating that US citizens are allowed one thing and foreigners are not. They are merely saying that you must have a valid SSN.
The unusual requirement for a valid SSN successfully circumvents the treaty, as there is nothing in the tax treaty (nor the social security agreement) which would force issuance of an SSN to Cdns in your situation. There are very few instances in the tax system where an ITIN is not equivalent to an SSN, and this is clearly one of them.
I should also point out that since your child does not have an SSN and did not live in US for half the year (and thus would have no qualifying children), you would have to have lived in the US more that half the year to qualify qualify for EIC.
Looks like EIC is not in the cards for you.
You might still be entitled to the Child tax credit (I would apply for it and see).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
I think I am qualified for Child Tax credit. As pub 972 says:
A qualifying child for purposes of the child tax credit " Was a U.S. citizen, a U.S. national, or a resident of the United States. If the child was adopted, see Adopted child below". The Child lived with me more than half year in Canada. Even he never entered US, but if we elect ourself as US resident with Treaty, the Child is a US resident too. I will try and let your guys know.
Another questions, Which item (line number) shall I put Canada EI earning in 1040? ( TurboTax just add it up to wages -line 7 even I marked it as Foreign earned income.) Shall I put it into line 19 as a unemployment compensation? or line 21 as other income?
Thank you, Nelson and have a nice weekend.
A qualifying child for purposes of the child tax credit " Was a U.S. citizen, a U.S. national, or a resident of the United States. If the child was adopted, see Adopted child below". The Child lived with me more than half year in Canada. Even he never entered US, but if we elect ourself as US resident with Treaty, the Child is a US resident too. I will try and let your guys know.
Another questions, Which item (line number) shall I put Canada EI earning in 1040? ( TurboTax just add it up to wages -line 7 even I marked it as Foreign earned income.) Shall I put it into line 19 as a unemployment compensation? or line 21 as other income?
Thank you, Nelson and have a nice weekend.
ONE WORLD
It is Unemploymnet compensation.
The child credit is iffy. He does not meet the definition, regardless of your election.
I know that, for instance, those with US green cards living in Canada (thus fling as US residents), with non-US citizen children who do not have a green card, have not been allowed to claim the credit, since their children do NOT meet the standard. Article XXV.3 covers DEDUCTIONS for children living in Canada (that is why you can claim your child as a deduction on 1040). The CREDIT however may be another story.
As I said, however, I would claim it, and see what happens.
The child credit is iffy. He does not meet the definition, regardless of your election.
I know that, for instance, those with US green cards living in Canada (thus fling as US residents), with non-US citizen children who do not have a green card, have not been allowed to claim the credit, since their children do NOT meet the standard. Article XXV.3 covers DEDUCTIONS for children living in Canada (that is why you can claim your child as a deduction on 1040). The CREDIT however may be another story.
As I said, however, I would claim it, and see what happens.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing