US and Canada 2010 Income taxes

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jade2010
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US and Canada 2010 Income taxes

Post by jade2010 » Thu Mar 17, 2011 12:54 pm

We are both US and Canadian citizens. After receiving my US citizenship in Sept 2010, I moved back to Canada and started working again.But, my husband is still iving and working in US. I really don't know how to file our taxes, Canada first or US? Does my huband need to file Canadain taxe since he is still working in US and is a non-resident to Canada? we have one child by the way. Please help!

JGCA
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Post by JGCA » Mon Mar 28, 2011 12:18 pm

You came back to Canada you file a tax return in Canada for the time you came to Canada till Dec 31 10. You are also required to file a US tax return since you are a US Citizen on world income but can claim tax credits for any amount paid to Canada and can exclude earned income for US filings.

Your husband does not have to file a CND tax return unless he has CND source income from Canada he will file a US return either as Married jointly with you or Married single .
JG

jade2010
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Post by jade2010 » Tue Mar 29, 2011 7:27 am

Thank jgca for your help!
So another question is ,which filing for US tax return is better? My daughter, 9, and I lived with my husband from Jan to aug 2010 in US. She and I moved back to Ontario first and my income started in ON from Sept 2010. My husband only has income in US in 2010

nelsona
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Post by nelsona » Tue Mar 29, 2011 9:49 am

Since spouse MUST file 1040, it is almost alawys better to file joint 1040 for entire year, and, as JGCA said, exclude your Cdn wages using 2555 and take credit/deduction for your Cdn taxes on other income using 1116.
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jade2010
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Post by jade2010 » Fri Apr 01, 2011 12:00 am

Last year, I only lived and worked for three months in Canada. 9 months in US, unemployed. Can my Canadian earned income still be excluded from US tax return? Just wondering, do I have enough physical present in Canada for doing so?

JGCA
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Post by JGCA » Fri Apr 01, 2011 8:29 am

yes that is the form 2555 that you use on teh 1040 to exclude the earned work related income from US tax the amount of time you were in Canada is not relative since you were in the US most of the year now went back to Canada and want to exclude this from US tax.
JG

nelsona
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Post by nelsona » Fri Apr 01, 2011 9:30 am

Not so fast.
To use 2555 in your case, you would need to establish that you are present in canada for the required time, which would be 330 days in a 1-year period, so the earliest you will be able to file 2555 for the 2010 tax year is some time in August 2011, and then only if you remain in canada (or at least establish tax residency) for that period.

Only then will you be able to file 255 and exclude your Cdn-sourced wages.

So, you will have to file for an extension, explaining that you cannot file until you meet the tax home or physical presence test.

You might simply want to file 1116 for tax credit instead, which you can do as soon as you determine your Cdn tax.
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jade2010
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Post by jade2010 » Fri Apr 01, 2011 10:38 am

So, is there a form on IRS website which I can download and fill it out for 2555 extension?

nelsona
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Post by nelsona » Fri Apr 01, 2011 11:20 am

you will be filing to extend filing the entire 1040, not just 2555. Your software will print out the extension.
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jade2010
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Post by jade2010 » Fri Apr 01, 2011 1:56 pm

So if I just filed 1116 for tax credit, I would not need to file the extension, right? is getting the tax credit better than filing the extension?

nelsona
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Post by nelsona » Fri Apr 01, 2011 2:37 pm

Typically, because -- as a couple -- you have income from both US and canada, 1116 will NOT reduce your US taxes on the Cdn wage to zero, while 2555 will.

So, I would be filing an extension, and eventually using 2555 when eligible, since that is what you will be doing for 2011 as well (you won't haveto wait in that year).

You will of course be filing a joint return with your spouse, so in essence you will both be extending.

If this is a problem because your spouse is waiting on a big refund, you could separate your filings, allowing him to file right now, but this is an error-prone situation, and not to be handled by amateurs.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

jade2010
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Post by jade2010 » Mon Apr 04, 2011 12:08 am

Thank you Nelsona for your reply. We are not expecting a big refund, so will go for filing an extension. Do you know how long will take IRS to approve our extension once we file it?

nelsona
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Post by nelsona » Mon Apr 04, 2011 4:49 am

The extension is automatic. Expect nothing from IRS.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

jade2010
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Post by jade2010 » Sun Apr 10, 2011 6:14 pm

I am looking into filing the extension on IRS. There are two forms, one is 4868 and the other one is 2350. I think for filing married jointly, my husband needs to file 4868 and myself file 2350. is this corrected, please confirm, thanks!

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