American/Canadian citizen, living in Canada. I think I have filed all the forms necessary on both sides. For the U.S. filing, I file 1040, Sched B, Sched D, 2555-EZ, and 8891.
I received nothing but dividends (both ordinary and qualified), capital gain distributions, and a few cents of interest from the U.S. However, I received substantial interest from Canada.
I believe I have to include the Canadian interest on line 8a of form 1040 - am I correct? Since I also included it in the Canadian tax forms, this looks like I am setting myself up for dual taxation - so I could be wrong. Please let me know what I should be doing.
As for the dividends, I chose to file Sched D, even though I had no capital gain or loss in 2012. The reason for filing this form was based on the instructions for Sched D, which states "To report a capital loss carryover from 2011 to 2012". When I completed Sched D, the last line asks if I have qualified dividends, which I did, and so it says I need to complete Qualified Dividends and Capital Gains Worksheet. But line 1 of this worksheet says I need to use amount from line 3 of Foreign Earned Income Tax Worksheet, but this worksheet says "if form 1040, line 43 is 0, do not complete this worksheet", and my line 43 was indeed 0, so essentially, I don't need to fill out either the Qualified Dividends and Cap Gains worksheet or the Foreign Earned Income Worksheet - am I correct?
Finally, the U.S. dividends were included in Schedule 4 and T1-General, line 121. I am beginning to think I shouldn't have done this. Should I only report Canadian investment income on these lines? What confused me was that if I didn't include the U.S. dividends on Canadian Schedule 4, I won't be paying taxes on this in either country, because in the U.S., the amount of dividends I got was less than the capital loss carryover of 3000 that I am entering on line 13, which came from Sched D, line 21 (annual limit on applying capital losses). I am not complaining about not having to pay the tax, but I want to make sure I am not making a mistake in my filing.
Could you please help?
Dual citizen in Canada - forms are sending me in circles
Moderator: Mark T Serbinski CA CPA
clarification
I just wanted to add this clarification about the U.S. dividends appearing on the Canadian T1-General, line 121 - I am using a tax software for Canada, and I didn't enter these amounts under Canadian income. I entered this under Foreign investment income, and the software seem to have included it all on line 121. So I am paying taxes on these in Canada. Luckily my dividends did not exceed the capital loss carry-over amount in the U.S., because if it had, then I would have had to pay a tax in the U.S. too - and this doesn't seem right, so I am still confused about the method of reporting.
Interest always goes on schedule B, and then is translated to 1040.
As to where you are taxed, as a US citizen residing in Canada YOU ARE TAXED IN BOTH COUNTRIES ON EVERYTHING.
It then becomes a matter of using various credits, deductions, and exemptions.
As to where you are taxed, as a US citizen residing in Canada YOU ARE TAXED IN BOTH COUNTRIES ON EVERYTHING.
It then becomes a matter of using various credits, deductions, and exemptions.
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, Nelsona..
I suppose your way of looking at it is literally true - that all earnings are taxed in both countries - but, I was looking at it from the effective angle. In other words, where do I ultimately pay the tax and where would I get the credits from, when it comes to U.S. dividends when I live in Canada.
Yes, I reported both Canadian interest and U.S. dividends in both U.S. 1040 Sched B and T1-General (Canadian) forms. And because my dividends were low enough to fall under the U.S. standard deductions and the capital loss caryover (3000), effectively I paid the tax in Canada and not the U.S. But, if I had a larger dividend amount or even capital gains that eventually surpass the standard deduction + capital loss carryover, I can see eventually paying a tax in the U.S. as well as in Canada. Is this how you see it too?
Also, could you respond to the worksheet question I had. Is it OK to not be able to use either the Qualified Dividends and Cap Gains worksheet and the Foreign Earned Income worksheet due to the conditions associated with them? I feel somewhat unsettled when instructions in one form ask me to use a particular form and then the instructions on the form I was supposed to use prevents me from using it.
I suppose your way of looking at it is literally true - that all earnings are taxed in both countries - but, I was looking at it from the effective angle. In other words, where do I ultimately pay the tax and where would I get the credits from, when it comes to U.S. dividends when I live in Canada.
Yes, I reported both Canadian interest and U.S. dividends in both U.S. 1040 Sched B and T1-General (Canadian) forms. And because my dividends were low enough to fall under the U.S. standard deductions and the capital loss caryover (3000), effectively I paid the tax in Canada and not the U.S. But, if I had a larger dividend amount or even capital gains that eventually surpass the standard deduction + capital loss carryover, I can see eventually paying a tax in the U.S. as well as in Canada. Is this how you see it too?
Also, could you respond to the worksheet question I had. Is it OK to not be able to use either the Qualified Dividends and Cap Gains worksheet and the Foreign Earned Income worksheet due to the conditions associated with them? I feel somewhat unsettled when instructions in one form ask me to use a particular form and then the instructions on the form I was supposed to use prevents me from using it.
If you have US-source income that is greater than your dedcution exemption, etc, you will pay tax in US, but that small amount will be credited on your Cdn taxes.
Your worksheet question is too mechanical for me. Use software and muddle through.
Your worksheet question is too mechanical for me. Use software and muddle through.
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