follow up:order of filing for dual us/can citizen now in can

[lanman2000]

Hi nelsona,

My thread got hijacked so I don't think you saw my follow up question about the order of filing us/can returns.

Here was your advice...

[quote="nelsona"]You do each return with no accounting for foreign tax credits.
Then you complete your Cdn one accounting for any allowed US tax from the preliminary US return.
Then you do you complete your US one, using the the completed Cdn return. No other iterations.[/quote]

Now for my follow up question:
Do I include foreign INCOME on each return during that first pass??

Thanks in advance for your help.

[nelsona]

Assuming you've been living in Canada the entire year, you report ALL income on both returns. That income will be there on every pass.

You know what's foreign based on which return you are filling.

[lanman2000]

i moved to Canada on May 29th. Either way you answered my question which is yes I need to include all applicable/taxable income on both returns for all passes...


So:

US return would include: ALL income from US and Canada for whole year since they tax all worldwide income on me b/c i'm a US citizen.

Canada return would include: ALL income from Canadian sources and ALL US source income from May 29th to Dec 31.

Right?

Again, thanks a ton for all your help. I appreciate it.

[nelsona]

Correct. There will be very little tax credit given on your Cdn return for US income.

[bcfarmer]

hi lanman -

i realize this is an old thread but wondering if you can help me. i am in the same situation as you, with the back-and-forth foreign tax credits causing an endless loop. i think i understand what i need to do now base on nelsona's replies to you, but i would like to know how it all worked out for you in the end. any other advice you can give me?

[lanman2000]

I did the returns and then had them done professionally and I was off by quite a bit. It is pretty complicated for a first timer...

[bcfarmer]

Hi. Thanks very much for your reply.

Were you able to tell exactly what you did wrong from what your preparer did? I am not exactly a first timer since I have filed our taxes in Canada and the US for 3 years now, it is just a slightly different scenario this time. I am familiar with the other ins and outs of the process. It would be great, if you have the time, if you could give me some details so I can try it myself.

And, would you recommend the preparer that helped you? If so I would appreciate their contact info. My preference would be to do what you mention: prepare the returns myself, then pay someone to look them over and correct errors. If your pro is open to this, that is great.

Thanks very much for your valuable time.

[bcfarmer]

One more thing:

We do not have any foreign tax credits from our Canadian return for our US return, because we have no foreign income (rental was a loss this year). SO, I cannot fill out a form 1116, but I still have to pay taxes to Canada. Do you know what line I might be able to claim this on, on my US return, or does this mean I cannot claim a foreign tax credit for the taxes I pay Canada?

Thanks.

[JGCA]

If you can not claim a FTC on your 1040 for tax paid in Canada for whatever reason then try claiming the tax paid in 2010 to Canada as an itemized deduction on Sch A this may help if you can not claim them elsewhere as you state.