US Citizen living in Canada, US consulting clients

[trevor]

I am a dual Canadian-US citizen living in Montreal, Canada. I am a University professor in Canada, but do some consulting for US clients. I would like to make sure I have declared all this income correctly on my US return.

Here is some relevant background:

- I live and work in Canada
- main employment is as as university professor in Canada
- I have two US-based consulting clients; the work is all performed in Canada
- one of them has generated a 1099-MISC form for the fee, the other did not
- I declare the consulting fees as business income in Canada; I use my own name for the business and it is run out of my home office

Here are my main questions:

- do I have to declare a business on my US return, and pay self-employment tax?
- can I claim (on US return) the foreign tax credit for Canadian and QC taxes paid on my total income? (employment plus consulting fees from US clients?)
- does the 1099-MISC income have any special implications? (i.e. can this force me to have to declare a business on US return?)


Here is the basic approach I am using now:

CDN:
- I declare all world income on my Canadian and QC returns, and pay applicable taxes on all of it

US:
- I declare all my world income (employment and consulting) on line 7 of form 1040
- I take mortgage interest deduction (for my home in Canada; apparently this is allowed)
- I take foreign tax credit for Canadian and Quebec taxes owing
- the net result is zero tax owing to US

Does this sound reasonable? I used TurboTax and based the decisions on the filing of a colleague who has an identical situation and who was previously advised by an accountant. I had a hard time finding an accountant with the required expertise (in QC) but will try harder next year as this is clearly quite complex. Does Serbinski doe Quebec returns?

I've seen some discussion of this topic, but not the impact of 1099-MISC forms.

Thanks for any info,

T