I'm a Candian/USA dual citizen, living in Canada. I expect that in 2015 my Canadian salary will exceed the foreign earned income exclusion, and that over the next decade that salary will increase some 25%. (Besides modest interest on bank accounts I have no other sources of income.) I'm trying to find ways to avoid incurring obligations.
I've been reading up on the issue, but not understanding much. It seems I'm not allowed to use charitable deductions or RRSP investments to lower my income beneath the minimum. I own my home, but wonder if I found a rental to live in (renting out my home) to get a housing exclusion or deduction. I also see references to using the Foreign Tax Credit (form 1116) in combination with the earned-income exclusion to avoid tax obligations, but can't quite understand how this works.
Any advice would be much appreciated.
newbie dual citizen seeking to avoid US tax obligations
Moderator: Mark T Serbinski CA CPA
Reducing your taxable income is not necessary to avoid having to pay US taxes. Cdn taxes will always exceed US federal tax rates, so whether you exceed the FEIE or not matters little.
You will always be using 1116 for some income in any event, as only wages are excludable. So you only need to decide if you will use 1116 only, or 2555 and 1116.
You are most certainly allowed to claim chartable deductions made in Canada on your US return. You can use RRSP deductions, but only if made through an employer plan.
Can I ask how you recently became a dual citizen?
You will always be using 1116 for some income in any event, as only wages are excludable. So you only need to decide if you will use 1116 only, or 2555 and 1116.
You are most certainly allowed to claim chartable deductions made in Canada on your US return. You can use RRSP deductions, but only if made through an employer plan.
Can I ask how you recently became a dual citizen?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Many thanks for the responses. I feel optimistic for the first time in a while.
I became a dual citizen about 5 years ago. Last year or so I filed all the missing FATCA forms.
I wish the tax instructions were a little clear, so I could "do it yourself," but I guess I'll have to find a local cross-border tax preparer to sort it out.
Thanks again for your help.
I became a dual citizen about 5 years ago. Last year or so I filed all the missing FATCA forms.
I wish the tax instructions were a little clear, so I could "do it yourself," but I guess I'll have to find a local cross-border tax preparer to sort it out.
Thanks again for your help.
If you've done FATCA and a few returns, I owuld think you are able to use software and do your own return.
Just one caveat: once you stopu using 2555 to exclude wages (if that is what you decide, like I said you can use 1116 on the excess), you can't go back to it for a period of 5 years.
Just one caveat: once you stopu using 2555 to exclude wages (if that is what you decide, like I said you can use 1116 on the excess), you can't go back to it for a period of 5 years.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing