I have spoken to the international tax office for the IRS, CRA, CPP, and SSA and no one seems to know what I should do. Let me explain my situation. Nelson you've helped me in the past I hope you can clarify this for me because I do not want to be double taxed.
I received Canadian income last year as well as self-employed income from U.S. sources. I paid into CPP from my canadian earnings. I've already completed my canadian taxes and it has been processed. I'm trying to figure out my U.S. return. I know what forms I need to fill out. (1040, Schedule C, and 2555 EZ because my total worldwide income was less than 80000) the question lies with the 4000 or so bucks I earned as SE U.S. income.
I called the folks here in Canada that handle the CPT 56 for or whatever and they said that they couldn't issue me a certificate for CPP coverage because the SE income was from U.S. sources. And everyone else that I have asked don't have a clue. Help!
I forgot to mention I'm a U.S. citizen and a permanent resident of canada.
Tim
Social Security or CPP
Moderator: Mark T Serbinski CA CPA
I'm puzzled as to why they would balk at giving you a CPT56 "because the SE income was from U.S".
WHY ELSE wuold you need such a certificate?!
THe CPT is specifically meant to present to IRS in order to exclude SE income (both Cdn and US sourced) from SS tax.
In any event, since you are self-employed, you are not absolutely required to attach the CPT to your US return.
As long as you were not present in the US for more than 183 days, you should be fine simply attaching a note to your 1040, explaining that you are a Cdn resident, and thus covered by CPP (for both your Cdn and US SE income).
You should however, have paid CPP on your US earnings in such case.
Your other option is to simply pay SE and then claim it as a tax credit on your Cdn return.
As to using 2555, this will only exempt your Cdn SE income from INCOME tax, not from SE tax. Only the note, or a CPT will exempt you from SE tax on the Cdn and US SE income.
Use of 255 does not depend on "my total worldwide income was less than 80000". This is not a criteria.
Look at IRS publication 533:
<i>nelsona non grata... and non pro</i>
WHY ELSE wuold you need such a certificate?!
THe CPT is specifically meant to present to IRS in order to exclude SE income (both Cdn and US sourced) from SS tax.
In any event, since you are self-employed, you are not absolutely required to attach the CPT to your US return.
As long as you were not present in the US for more than 183 days, you should be fine simply attaching a note to your 1040, explaining that you are a Cdn resident, and thus covered by CPP (for both your Cdn and US SE income).
You should however, have paid CPP on your US earnings in such case.
Your other option is to simply pay SE and then claim it as a tax credit on your Cdn return.
As to using 2555, this will only exempt your Cdn SE income from INCOME tax, not from SE tax. Only the note, or a CPT will exempt you from SE tax on the Cdn and US SE income.
Use of 255 does not depend on "my total worldwide income was less than 80000". This is not a criteria.
Look at IRS publication 533:
<i>nelsona non grata... and non pro</i>
Hey Nelson,
I appreciate your insight. What's the best way to go about setting an appointment for an initial consultation with Serbinski? This whole tax mess is confusing the heck out of me and I need assistance.
Like I said before, I have already filed my CDN Tax Return so that's done. I need to know specificly what forms I need to file for the IRS and what other options I have. Thanks again.
Tim
I appreciate your insight. What's the best way to go about setting an appointment for an initial consultation with Serbinski? This whole tax mess is confusing the heck out of me and I need assistance.
Like I said before, I have already filed my CDN Tax Return so that's done. I need to know specificly what forms I need to file for the IRS and what other options I have. Thanks again.
Tim
I don't work for Serbinski -- although he should probably start paying me [:D].
I'm curious as to how your were able to submit your Cdn tax return even though you haven't yet calculated your US tax.
Since you earned US-source SE income, you will have some US tax to pay, no? maybe not if you can exempt your Cdn SE income, and the rest is less than your other deductions, I guess.
<i>nelsona non grata... and non pro</i>
I'm curious as to how your were able to submit your Cdn tax return even though you haven't yet calculated your US tax.
Since you earned US-source SE income, you will have some US tax to pay, no? maybe not if you can exempt your Cdn SE income, and the rest is less than your other deductions, I guess.
<i>nelsona non grata... and non pro</i>