What is my tax situation in the U.S.??

[davidyulca]

Individual is Canada-U.S. citizen living in Canada (born in Canada to U.S. parents). He is currently a college student in the U.S.

Income from emplyment in Canada was $C 12000.00.
Summer job is U.S. gave $US 7600.00, Fed Tax 950.00 NY tax 315.00

In Canada the individual has tuition deductions of $25000.00. Thus he will not have any taxes payable on his Canadian return.

In the U.S. the maximum tuition deduction allowed is $US4000.00


1. Are there any taxes payable on his U.S. return which he understands he must file as an American living abroad.

2. Does he recover the state and federal taxes - and how ??

[nelsona]

He must report ALL income earned worldwide on his 1040, including his Cdn income. Unless he qualifies for the foreign earned income exclusion, he will also have to pay US tax on his Cdn income.

He cannot recover any US tax paid on his Cdn return, since he already owes no Cdn tax.

He cannot claim any tax credit for Cdn taxes on his US return, since he owed none.

Unless he can exclude his Cdn wages (this is done thru fom 2555 and he may not qualify) he would be like any other College kid that earned US$16,000 in wages.

Whether he owes any US tax will depend on his deductions, credits, and filing status (he might be viewed as a dependant) which may indeed make him taxable in US and NY.

<i>nelsona non grata</i>

[davidyulca]

Nelson - what do you mean "he may be viewed as a dependant" - of who?? His U.S. parent is no longer in the picture.

[nelsona]

What do you think the word 'may' means? 'May' implies 'may or may not'.

His tax liability is somewhat based on whether (or not) anyone can claim him as a dependant.

If no one can, then so be it.

How was I expected to know his family situation; your post was silint on this.

Otherwise I would have said he WILL be viewed as a dependant, or he WILL NOT be viewed as a dependant.

I thought your question was about his tax liability.

<i>nelsona non grata</i>

[davidyulca]

Thanks Nelson - mea culpa

Now as to form 2555 - you think he may or may not qualify??
His main residence is in Canada. However, since he is present in the U.S. for extended periods he may be deemed to be a U.S. resident nonethelss. Unless the fact that he is a full time college student means that this presence may not count.

What do you think??

[nelsona]

The bona fide residence test is basically a simplified treaty residency detrrmination, so it comes down to whether or not (a) he ALWAYS maintains sufficient ties in Canada to be considered resident there, and (b) whether while in US, he creates sufficinet ties there (other than school) to 'tip' the balance towrds US residency.

This is often difficult for students since thir residential ties are often just their back-pack.

But, IMO, so long as he keeps going back to Canada after the school year, year after year, at least for some work, he should be fine claiming FEIE.

Of course if he doesn't go back, he doesn't qualify for FEIE, but doesn't need it either. [;)]

<i>nelsona non grata</i>

[davidyulca]

So based on his various credits and earned income exemption he will not have any taxes payable in the U.S. as well. I guess he will then receive a refund of the federal tax that was withheld last year. Does he get a refund of his state tax by filing the federal form? Does he have to file a seperate NY State income tax form?

[nelsona]

Separate of course.

He may or may not get tax back from NY; that will depend on his tax return for that state.

<i>nelsona non grata</i>