Dual citizen moving to US, need help with taxes!
Moderator: Mark T Serbinski CA CPA
Dual citizen moving to US, need help with taxes!
Ok I need help, I am a dual citizen born in Canada, I just recently found out that I was supposed to be filing my US taxes, I have no idea where to even start, how far back do I have to go? And what forms do I have to fill out? And where do I get these forms? Basically I have no idea what to do or how to go about it but I'm planning on moving to the US relatively soon so I need help, I'm somewhat limited on money so I would prefer to not have to pay an accountant to do them for me but I know nothing about all of this stuff so I don't even know if I could do it myself, any tips or help of any kind would be greatly appreciated.
Hi Sydeburnz,
I'm also a dual citizen and became tax compliant 2 years ago. I hired an accountant and it was pretty pricey. If you do not want to go this route, I would recommend buying 3 years of a tax program called "TaxACT". It's only about $12 per tax year and you can get prior versions. I hear that typically, if you owe nothing, you only have to file back 3 years of tax returns (I had to file back 6 years because I did so before the IRS said 3 years is fine). Are you aware of the FBAR form? (Foreign back account reporting) I think you need 6 years of these but I am not sure. Maybe someone else will clarify.
Anyway, I suggest you use taxACT to generate 3 years of tax returns. Study up on IRS forms 1040, 2555, and 1116 by reading the instructions. If you've been living in Canada, it is very likely that you will owe $0.
In some cases, if you annual income is below ~$90,000, you might not need form 1116 - the credit for taxes paid to Canada.
I suggest basing your US return on your Canadian T1 tax returns. Don't forget to use US dollars (visit the Bank of Canada website for annual average exchange rates for each year). If you have capital gain and dividend income, ask what factors to multiply these by before putting them on your US return (2x for capital gains, and 1.45 for dividends depending on the type and the year).
When you generate all your returns, include a cover letter explaining that you didn't know you had to file these, and that you born in Canada, and I have been in good status in Canada regarding your taxes.
I'll leave you with this.
Good luck.
MGeorge.
I'm also a dual citizen and became tax compliant 2 years ago. I hired an accountant and it was pretty pricey. If you do not want to go this route, I would recommend buying 3 years of a tax program called "TaxACT". It's only about $12 per tax year and you can get prior versions. I hear that typically, if you owe nothing, you only have to file back 3 years of tax returns (I had to file back 6 years because I did so before the IRS said 3 years is fine). Are you aware of the FBAR form? (Foreign back account reporting) I think you need 6 years of these but I am not sure. Maybe someone else will clarify.
Anyway, I suggest you use taxACT to generate 3 years of tax returns. Study up on IRS forms 1040, 2555, and 1116 by reading the instructions. If you've been living in Canada, it is very likely that you will owe $0.
In some cases, if you annual income is below ~$90,000, you might not need form 1116 - the credit for taxes paid to Canada.
I suggest basing your US return on your Canadian T1 tax returns. Don't forget to use US dollars (visit the Bank of Canada website for annual average exchange rates for each year). If you have capital gain and dividend income, ask what factors to multiply these by before putting them on your US return (2x for capital gains, and 1.45 for dividends depending on the type and the year).
When you generate all your returns, include a cover letter explaining that you didn't know you had to file these, and that you born in Canada, and I have been in good status in Canada regarding your taxes.
I'll leave you with this.
Good luck.
MGeorge.
Dong the tax return is the easy part. Unfortunately, the RRSP election, FACTA, and FBAR is what IRS considers important.
btw, MGeorge, it was always 3 years if you didn't owed anything, six years if you did. Sorry that you didn't have this info before your acct rooked you.
btw, MGeorge, it was always 3 years if you didn't owed anything, six years if you did. Sorry that you didn't have this info before your acct rooked you.
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 for the replies, just some more info that might help. As far as I can tell I don't have to file that FBAR stuff because I've never had over $10000 in assets at any given time, and I don't have any RRSPs or tax free savings accounts or anything of that nature. Basically I've just been working the same job for the past 5 years making roughly 30-40k a year gross, and it just gets direct deposited into my chequings account. I don't have any other financial interests of any sort whatsoever, just go to work and get paid, nothing more. Will that make it any easier on me? Is there any forms I won't have to fill out? I've been looking over the forms at the IRS website and it just leaves my head spinning, and I really can't afford an accountant, unless it's relatively cheap. I really have no idea how much it would cost, $50? $5000? I really don't know. Once again thanks for the replies, more help with this new information would be great, thanks.
Hi Sydeburz,
An accountant that handles US tax returns in Canada will typically charge between $500-$750 per tax year.
Your situation sounds simple to me. Based on what you've said, no RRSPs, no TFSAs, and no FBAR requirement, you simply need to file a 1040 tax return, with form 2555 added in order to exclude your Canadian earned income and get your US tax return to zero.
Have you used tax software before, like Turbotax (previously Quicktax)? Since your budget is tight, I would recommend TaxACT. Alternately, you could try to fill out the forms yourself from the IRS website - but the tax software will handle all of the calculations, so I prefer this route.
MGeorge.
An accountant that handles US tax returns in Canada will typically charge between $500-$750 per tax year.
Your situation sounds simple to me. Based on what you've said, no RRSPs, no TFSAs, and no FBAR requirement, you simply need to file a 1040 tax return, with form 2555 added in order to exclude your Canadian earned income and get your US tax return to zero.
Have you used tax software before, like Turbotax (previously Quicktax)? Since your budget is tight, I would recommend TaxACT. Alternately, you could try to fill out the forms yourself from the IRS website - but the tax software will handle all of the calculations, so I prefer this route.
MGeorge.