I am a U.S. citizen, moved to Canada (Quebec) July 2010 from Illinois. I don't own any home nor did I sell any, no kids, my taxes have been pretty easy up until this year. I worked Jan. 2010 - July 2010 in Illinois and then moved and have been living and working in Canada since July.
I filed my Canadian and Quebec taxes and still need to file my US taxes for federal and IL. I've been trying to understand what forms I need to fill out so I'm not double taxed. I see there is a tax treaty and I have to report world income BUT I don't understand the residency tests, etc. because in order for me to exclude on my U.S. 1040, the Canadian income (2555), I would have to live in Canada for longer than the 158 days I have been here. Do I fill out the 1116 instead then and use that to get a tax credit? OR both?
My head is going to implode trying to figure this out. (Canadian forms were actually easier to follow).
THANK YOU! :roll:
U.S. taxes after moving to CN - file 1116 or 2555?
Moderator: Mark T Serbinski CA CPA
You can still file 2555 for the portion of 2010 that you were in canada. You merely need to wait until you actually satisfy the 330 day requirement, which would be in june//July 2011. File an exrension until then -- if you even need to, since foreign residens automatically get extension.
You will be able to prorate your yearly exemption for the numebr of days in 2010 that you qualify.
1116, though [ossible, won't get you the best tax result, because of income in both countries during the year.
You will be able to prorate your yearly exemption for the numebr of days in 2010 that you qualify.
1116, though [ossible, won't get you the best tax result, because of income in both countries during the year.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
[quote="nelsona"]You can still file 2555 for the portion of 2010 that you were in canada. You merely need to wait until you actually satisfy the 330 day requirement, which would be in june//July 2011. File an exrension until then -- if you even need to, since foreign residens automatically get extension.
You will be able to prorate your yearly exemption for the numebr of days in 2010 that you qualify.
1116, though [ossible, won't get you the best tax result, because of income in both countries during the year.[/quote]
BLESS YOU child! I knew it had to be something simple. Of course the IRS can't ever spell things out for the lay person. I just re-read through the i2555 and see that I can apply for an extension (2350) until I do meet the 330 day requirement. Now it all makes sense!!!
THANK YOU!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! :D
You will be able to prorate your yearly exemption for the numebr of days in 2010 that you qualify.
1116, though [ossible, won't get you the best tax result, because of income in both countries during the year.[/quote]
BLESS YOU child! I knew it had to be something simple. Of course the IRS can't ever spell things out for the lay person. I just re-read through the i2555 and see that I can apply for an extension (2350) until I do meet the 330 day requirement. Now it all makes sense!!!
THANK YOU!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! :D
Ok, I spoke too soon. After using form 2555 and then trying to calculate my tax (line 44) on form 1040, using the worksheet required "Foreign Earned Income Tax Worksheet", I end up owing over $200 in taxes. THis doesn't seem right when my U.S. taxable income is only $13, 655.
I don't understand the worksheet. It asks for the amount from 2555, line 45, ($37,941) added to the above U.S. taxable income, which brings me up to over $51K. I don't understand why I have to calculate the tax on that amount and then calculate the amount for the tax on the foreign income as well, and then subtract the difference. It equals $3412 and I paid out $3144 (fed tax withheld form 1040). So I end up owing more in taxes based on both U.S. and foreign income.
How is this excluding my foreign income? It seems that I'm still being double taxed. I'm probably not doing something right but I've checked it over twice and can't figure it out. ...I should've paid someone to do this for me....ughgh.!!!
I don't understand the worksheet. It asks for the amount from 2555, line 45, ($37,941) added to the above U.S. taxable income, which brings me up to over $51K. I don't understand why I have to calculate the tax on that amount and then calculate the amount for the tax on the foreign income as well, and then subtract the difference. It equals $3412 and I paid out $3144 (fed tax withheld form 1040). So I end up owing more in taxes based on both U.S. and foreign income.
How is this excluding my foreign income? It seems that I'm still being double taxed. I'm probably not doing something right but I've checked it over twice and can't figure it out. ...I should've paid someone to do this for me....ughgh.!!!
That is how it is supposed to work. You get taxed if your income is above your deduction and exemptions, at a rate "as if" all your income was taxable. It is an anti-satcking provision put in a few years ago.
However the question is whether you should be using that worksheet. Typically, if your AGI falls below your deduction and exemption amount, you will owe nothing.
But if your income is above this, then your taxrate is recalacuted.
If line 43 is zero, you don't use this worksheet.
So, is line 43 greater that zero?
However the question is whether you should be using that worksheet. Typically, if your AGI falls below your deduction and exemption amount, you will owe nothing.
But if your income is above this, then your taxrate is recalacuted.
If line 43 is zero, you don't use this worksheet.
So, is line 43 greater that zero?
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
by the way, in seeing how much it saves or costs you, the amount you had withheld during the year is meaningless. Line 60 is what matters.
The correct way in determining what this Cdn income is costing you in US, is to fill the 1040
(a) without the Cdn income at all, then
(b) with the Cdn income added, but no exemption taken
(c) with the Cdn income added and the exemtion taken
(d) with the Cdn income added and 1116 filled.
These shoud all be done with software of course.
the nchoose (c) or (d).
The differnce between (c) or (d) and (a) is the amount of extra tax you are paying.
The fact that you need to report Cdn income in US at all, is thanks to the US govt, no one else.
The correct way in determining what this Cdn income is costing you in US, is to fill the 1040
(a) without the Cdn income at all, then
(b) with the Cdn income added, but no exemption taken
(c) with the Cdn income added and the exemtion taken
(d) with the Cdn income added and 1116 filled.
These shoud all be done with software of course.
the nchoose (c) or (d).
The differnce between (c) or (d) and (a) is the amount of extra tax you are paying.
The fact that you need to report Cdn income in US at all, is thanks to the US govt, no one else.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks so much for your help. I'm still confused.
I guess I assumed that I wouldn't have to pay any taxes at all on my Canadian income to the U.S. gov, since I've paid taxes to the Canadian gov. I don't live in both places, I don't live in the U.S. and have a second home in CAN, I don't live in the U.S. and commute to CAN....I thought that since I lived and worked in the U.S. for the first part of the year, I would file U.S. taxes for that time period....and that when I moved to CAN for the second part of the year, my CAN income would be excluded (2555), since I have to file with Canada and pay Canadian taxes.
It just doesn't seem right to me, since I've rarely had to pay federal taxes as my income was quite low as a graduate student for years, last year as postdoc fellow (but not considered education anymore, so deduction)...Yes, I have a real job now, but the fact that I'm paying out the nose to the Canadian gov for taxes and now have to pay more to the U.S. for income made in Canada,...irks me!
btw - line 43 is 13,650.
I guess I assumed that I wouldn't have to pay any taxes at all on my Canadian income to the U.S. gov, since I've paid taxes to the Canadian gov. I don't live in both places, I don't live in the U.S. and have a second home in CAN, I don't live in the U.S. and commute to CAN....I thought that since I lived and worked in the U.S. for the first part of the year, I would file U.S. taxes for that time period....and that when I moved to CAN for the second part of the year, my CAN income would be excluded (2555), since I have to file with Canada and pay Canadian taxes.
It just doesn't seem right to me, since I've rarely had to pay federal taxes as my income was quite low as a graduate student for years, last year as postdoc fellow (but not considered education anymore, so deduction)...Yes, I have a real job now, but the fact that I'm paying out the nose to the Canadian gov for taxes and now have to pay more to the U.S. for income made in Canada,...irks me!
btw - line 43 is 13,650.
You are a US citizen, this you need to report and pay tax to IRS FORVEVER.
IRs cuts their taxapayers a break by allowing credit, or exemptions, on some foreign income.
For 2011, because all your earnings will be in canada, you will not pay any taxes in US.
Its just because you are transitionning in 2010.
If it mkes you feel better, think of the tax you are paying as being on your US income. When you use the exemption, the fact that you paid tax in canada or not means nothing.
IRs cuts their taxapayers a break by allowing credit, or exemptions, on some foreign income.
For 2011, because all your earnings will be in canada, you will not pay any taxes in US.
Its just because you are transitionning in 2010.
If it mkes you feel better, think of the tax you are paying as being on your US income. When you use the exemption, the fact that you paid tax in canada or not means nothing.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best