US person in Canada, 14 years, never filed a US return

andsoitgoes · Post by **andsoitgoes** » Sat May 28, 2011 8:22 pm

So I make ~60k year (less these last few years), I don't understand how to set it so that I can get the US tax credit without getting screwed over.

jbryanvancouver · Post by **jbryanvancouver** » Sat May 28, 2011 8:27 pm

eortlund said:

In Turbotax, I list our Canadian income in US dollars in the same place any US taxpayer would on the 1040, using the average exchange rate for the year. Then in the deductions area of the program, I list the Canadian taxes paid in the foreign tax credit section. I agree it's not as straightforward as it could be, but if you play around with it, you should find the applicable areas.

So in the income section do you enter your Canadian wages as if you had a W2? I was entering it under the "foreign income" section of "less common income". I have been suffering all kinds of problems with Turbotax (like it mysteriously doubling all my income). When I get to the foreign tax credit section, I encountered more difficulties just even getting to a query screen where I can enter my foreign taxes paid.

eortlund · Post by **eortlund** » Sat May 28, 2011 8:31 pm

Yes, I enter the income as if I had a W-2.

I agree--it can be hard to get to the right screen for foreign tax credit--I just play around until I land at the right place.

I also have to remember to type in "Form 8891" in the forms section exactly like that--I don't get asked questions that lead me to 8891 otherwise.

jbryanvancouver · Post by **jbryanvancouver** » Sat May 28, 2011 9:15 pm

Thanks for pointing out the Form 8891 ! I hadn't even gotten to dealing with my RPP. I'll try again tonight with turbotax.

andsoitgoes · Post by **andsoitgoes** » Sat May 28, 2011 11:35 pm

Can anyone else help me out with figuring out the child credit thing? I'm a bit confused now...

eortlund · Post by **eortlund** » Sun May 29, 2011 10:28 am

What are you confused about at this point?

In a nutshell, you:
-Get onto Turbotax
-List your info, and that of your children
-Don't exclude your income, but instead enter it in US dollars, wages and bank interest, etc.
-Under deductions, select Foreign Tax Credit and enter taxes paid, again, in US dollars. You do a 1116 for taxes on wages (general) and a 1116 for taxes on interest (passive).
-Print out and send to the address listed.
-List your foreign bank accounts if over $10,000--print out but send to a separate address in Detroit, as listed on the form.

jbryanvancouver · Post by **jbryanvancouver** » Sun May 29, 2011 11:55 am

Turbo Tax continues to drive me crazy. I'm now trying Eortlund's method.

Eortlund: when you enter your Canadian wages as if you have a W2 did you check the "I worked outside the United States. (Don't check this box if you were employed by the U.S. government or its agencies.)" button? If I do check it (because it is true in my case), then turbotax automatically has me fill out a 2555. If I don't (which is a lie), then there is no place to enter my taxes paid in the foreign tax credit section because turbo tax does not seem to recognize foreign wages income unless there is a 2555. I don't see how you got around this.

eortlund · Post by **eortlund** » Sun May 29, 2011 3:14 pm

No, I do not check the box saying I (or my husband, that is) worked outside of the US. I suppose it is a lie, however, like you said, I don't want to generate a 2555. Plus, our address is clearly in Canada, my husband's employer and that Canadian address are listed, we take foreign tax credits, and write clearly on the top of the 1040 "TAXPAYERS ABROAD"

nelsona · Post by **nelsona** » Sun May 29, 2011 4:42 pm

However you trick the software (I wouldn't even bother with a fake W-2), rememebr that you are never under obligation to use 2555.

andsoitgoes · Post by **andsoitgoes** » Mon May 30, 2011 4:23 am

[quote="eortlund"]What are you confused about at this point?

In a nutshell, you:
-Get onto Turbotax
-List your info, and that of your children
-Don't exclude your income, but instead enter it in US dollars, wages and bank interest, etc.
-Under deductions, select Foreign Tax Credit and enter taxes paid, again, in US dollars. You do a 1116 for taxes on wages (general) and a 1116 for taxes on interest (passive).
-Print out and send to the address listed.
-List your foreign bank accounts if over $10,000--print out but send to a separate address in Detroit, as listed on the form.[/quote]

That clears things up a bit, actually...

Of course, a few more questions :)

- What dates to you use to set the exchange rate?
- I use the "Total income tax deducted" based on my T4 slip, correct?
- Can you explain how to incorporate the 1116 through TurboTax, general and passive?
- I know nelsona mentions going back 6 years, is this needed? Can I go back less? What is the likelihood I'll get the child tax credit for that full period of time? My children were born on Jan 22, 2005 (So I guess I would get the credit starting in 2006, correct?)

I want to thank everyone, again, for all their help.

This is terribly overwhelming for me and if it wasn't for a $150/month freelance writing job, I probably wouldn't have even thought of it. The thought of getting in right with the US govt, as disgusted as it makes me to HAVE to do it, at least will put my mind at ease.

I do have ONE other question...

Is it best to wait until I get my daughter's SSNs to file, or JUST file now and amend with my daughter's information when I get it.

If it's that I file now and amend later, should I add a note in about that when I file?

Thanks :)

Nick

nelsona · Post by **nelsona** » Mon May 30, 2011 7:54 am

Without a number for your children, you cannot even claim them on the return, so I would wait.

The absolute minimum you have to go back is 3 years, and only if you owe money in those three years do you need to go back six. They could deny your "refund" for the 3 earlier years, so you be the judge.

Since your income appears to be only wages and interest, which are periodic, you can use the yearly exchange rate, rather than a separate one for each transaction. The CRA website, or bank of canada website has those historical yearly figures.

eortlund · Post by **eortlund** » Mon May 30, 2011 10:31 am

I use www.oanda.com to find the average exchange rate for the year.

I use my CRA return to get the "total income tax" figure. If I used the T4 slip, it wouldn't take into account other deductions such as charity, extra RRSP, children's fitness, etc.

You just have to go into the Foreign Tax Credit section and follow the links around--I think that will make it clearer to you. Every year, I find it a bit confusing again and every year it becomes clear again.

andsoitgoes · Post by **andsoitgoes** » Tue May 31, 2011 8:56 pm

I'm going to try and book an appointment tomorrow to get my daughters booked in for their birth certificates/SSNs...

eortlund - What do you use from your assessment?

I was going to use the "Total Income Tax Deducted" amount, would that be right?

I'll try to do this again through TurboTax again tomorrow

nelsona · Post by **nelsona** » Tue May 31, 2011 9:22 pm

tax deducted is meaningless when it comes to foreign credit or deduction. You can only determine your taxes on your Cdn return. You do not need to wait for the asessment, however. Your completed tax return is sufficent

eortlund · Post by **eortlund** » Tue May 31, 2011 9:49 pm

I look at "total payable" on my complete tax return.