A quick way of estimating foreign tax owing?

Fructose · Post by **Fructose** » Thu Apr 10, 2014 4:49 pm

My wife and I care Canadian citizens now resident in the US (I work, she doesn't) and have just realized that due to our Canadian accounts filing the return is going to be much more complication than I had thought.

I'm not going to have time to thoroughly research, complete, and check all the forms I might need to fill in in addition to the joint 1040 (8891, 3520/3520A, 8938,8891, 8832, 8621, FBAR) by the deadline.

Hence I was planning on filing an extension but in order to do that its necessary to estimate the 2013 tax liability.
Is there a quick rule of thumb I could use to estimate the tax from foreign income for this purpose?
i.e. X% of $Y for my wife and Z% of $M for myself type of thing?

The foreign income is all in the form of interest on: bank accounts, RRSPs, and TFSAs.

(I already know exactly what my tax liability is going to be just taking US incoming into consideration, and the amount the IRS owe me is more than the total income from foreign accounts combined so presumably I'm not going to owe them anything that needs paying now.)

TIA

nelsona · Post by **nelsona** » Thu Apr 10, 2014 5:32 pm

Well your RRSP should be 0. If you don't think you owe anything, then don't bother filing for extension. You only file extension is you think you will owe, otherwsie extension is automatic, so filing form is unnecessary.

Fructose · Post by **Fructose** » Thu Apr 10, 2014 8:36 pm

"otherwsie extension is automatic".

Could you please explain that further, if I don't file by April 15th is there no penalty for late filing if I don't owe anything?

sunnysga · Post by **sunnysga** » Thu Apr 10, 2014 9:03 pm

Per IRS instructions on their website - look up International Taxpayer:

You may be allowed an automatic 2-month extension of time to file your return and pay any federal income tax that is due. You will be allowed the extension if you are a U.S. citizen or resident alien and on the regular due date of your return:

â€¢You are living outside of the United States and Puerto Rico and your main place of business or post of duty is outside the United States and Puerto Rico, or

â€¢You are in military or naval service on duty outside the United States and Puerto Rico

If you use a calendar year, the regular due date of your return is April 15, and the automatic extended due date would be June 15.

To use this automatic 2-month extension, you must attach a statement to your return explaining which of the two situations listed earlier qualified you for the extension.

sunnysga · Post by **sunnysga** » Thu Apr 10, 2014 9:15 pm

Oops, sorry. You are Canadians who live in the US. (My post above applied to living outside the US.)

nelsona · Post by **nelsona** » Fri Apr 11, 2014 12:03 am

Ignoring sonny's posts...
No there is no penalty for late filing if you have don't owe anything on April 15th.

And all other reporting requirements not associated with the payment of tax (8891, etc) have an October deadline

ChromiumDioxide · Post by **ChromiumDioxide** » Fri Apr 11, 2014 12:01 pm

Thanks. I'm going to sit down and study all these forms and my requirements at the weekend and I found a book on Amazon about US tax for Canadians which I've ordered, but in the meanwhile:

Could you please clarify the deadline situation regarding 8938, I saw this on a site "... the form must be filed with an individualâ€™s federal income tax return". Does that mean it needs to be filed after the 2 month extension and October would be too late?

nelsona · Post by **nelsona** » Fri Apr 11, 2014 12:18 pm

When it says filed with your return, it means it has the same deadline as your return: October. If you send in your return without it, you can still amend your return before Octber and it is still considered timely.

FinCEN/FBAR and 3520 are associtaed with your tax retunr, and thus they ahve different due dates and late filing consequences.