T1 Adjustments: How long does it take?

hello_image1978 · Post by **hello_image1978** » Sat Jan 24, 2009 1:00 pm

I am a U.S. citizen living as a permanent resident in Canada. In 2007, I claimed a federal foreign tax credit and a provincial foreign tax credit on my Canadian return for the taxes that I owed to the United States (in 2007, I spent half the year in Canada, and half in the U.S.). However, my tax preparer (H+R Block, whom I will never use again) failed to send forms T2209 and T2036 for some reason--or Revenue Canada failed to recognize them in my Canadian return. Therefore, H+R block filed a T1 Adjustment request for me, which was apparently sent to the International Tax Services Centre (I received a letter that they had received my T1 adjustment request in September).

I have not heard ANYTHING regarding my request since. I attempted to call the ITSO right before Christmas, but they assured me that my request had been received and they didn't require any further information from me at the time. The estimated it could take a few more months to process but couldn't tell me a specific time. In the meantime, Revenue Canada insists that I owe them in excess of 3000 dollars, which I am about to pay them--but will I get my money back if the adjustment ever goes through? Is there a possibility that I will never be reassessed? What should I do? Thanks.

nelsona · Post by **nelsona** » Sat Jan 24, 2009 2:09 pm

So, you reported US-sourced income on your Cdn return in 2007?

When did you move to canada? If you moved in the middle of 2007, then you should not have had any US income to report, and thus no US tax to get credited.

Really, the only US tax credits most Cdn residents have is when they work in US. US tax on interest, cap gains, etc, and US tax on income from before you arrived in canad is not creditable.

HRB is terrible, as you now know. And T1 adjustemnts take FOREVER.

hello_image1978 · Post by **hello_image1978** » Sun Jan 25, 2009 3:05 pm

Thanks, nelsona. In 2007, I continued to work for my former U.S. employer even after living in Canada. My U.S employer kept me on their payroll, and thus had filed a W-2 for me for the entirety of 2007. It seems what HRB did was to have me pay full year taxes to the U.S., and then claim foreign tax credits for the income I earned from my company from June 2007 (when I moved to Canada) on through December--because I was paying U.S. income tax on it.

From January 2008 on I have been self-employed by the same U.S.-based company on a contract basis (1099, not W-2). I work out of my home in Canada. I will be living in Canada for the foreseeable future. So in 2008, I am assuming I pay all taxes to Canada as a self-employed person (claiming the 2555 exclusion and getting a certificate of coverage as to not pay SS or Medicare SE taxes in the U.S.).

Having lost all trust in everyone after this experience, I am going to attempt to do my 2008 taxes myself. In the meantime, I write a check to Revenue Canada for 3000 big ones and wait in T1 purgatory for 2007. It is very depressing.

nelsona · Post by **nelsona** » Sun Jan 25, 2009 3:17 pm

Your situation for 2007 lokks like indeed you should have included the US income, and that you should have been able to get some foreign tax credit on your Cdn return.

In 2008 you are indeed entitled to use the foreign earned income exclusion (FEIE)to practically eliminate any US tax. If you have children, you might consider using foreign tax credits on your uS return, as this will entitle you to the child tax credit (using FEIE often disqualifies one from getting that $1000 per child).

Most americans try both methods to see what yields the most refund from IRS.

nelsona · Post by **nelsona** » Sun Jan 25, 2009 6:54 pm

Remember too that you MUST include your 1040 and W-2 to CRA in orrder to claim and US foreign taxes.

hello_image1978 · Post by **hello_image1978** » Tue Jan 27, 2009 8:47 am

Honestly? I am almost afraid that HRB didn't send a copy of my 1040 or W-2 to Revenue Canada, in my original return or with the T1 adjustment. Which is why Canada believes me to owe them 3000 dollars and my adjustment is still hanging out somewhere in limbo. It makes me so sick that I don't think I can even go back into HRB's office and scream at them again (I did once already).

But now I know better, that is for sure.

nelsona · Post by **nelsona** » Tue Jan 27, 2009 9:12 am

HRBlockhaeds simply cannot do cross border returns. Period.

hello_image1978 · Post by **hello_image1978** » Thu Jan 29, 2009 9:31 am

dude, the saddest part is that the returns appear to be completed correctly, it was the secretary responsible for stuffing everything into the envelope that messed up.

Should I resubmit the original T1 Adjustment request to the International Tax Services Office with my 2007 1040 and W-2 as insurance, or just wait in limbo forever?

nelsona · Post by **nelsona** » Thu Jan 29, 2009 11:29 am

There is no point re-submitting a T1-adj until the first one is done with.

nelsona · Post by **nelsona** » Thu Jan 29, 2009 11:32 am

The other choice is to not pay the $3000 yet, and wait for this to all play out.

I'm sure HRB has one of those phony "we'll pay for our mistatkes" clause.

Time to see is they are as fraudulent as incompetant.

Of course, I'm laughing to think that those starbucks rejects that work at HRB actually designate one of themselves a secretatry.