USA/Canada: Filing Taxes

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USA/Canada: Filing Taxes


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Old 19th January 2010, 08:01 PM
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Question USA/Canada: Filing Taxes

While there is another recent post along the lines fo taxes for USA/Canada, it did not reference my hopefully basic question.

I am an American citizen working in Canada on a TN Visa Work Permit. My only income last year was from the work I did in Canada on this work permit. For taxes this year, in the next several weeks, how to I go about filing my taxes?

Do I file with Canada only? Do I file with both USA and Canada? Do I need to make reference to my work up here on my USA tax form? Etc.

I obviously am just looking fro the basics as to how to go about filing my taxes this year. Any helpful links, information on organizations that could help, etc. would be greatly appreciated!

Cheers,

Tyler

P.S. - While I obviously got my via/permit (which some members on here helped me work out), I must say, these Canadian winters are a definite 180 from my life back in California. Brrrrrrrrrrr...

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Old 19th January 2010, 09:01 PM
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If you are a US citizen, or a permanent resident in the US (i.e. green card holder), you must always file a US tax return. And if you're working in Canada on a visa work permit, I'm fairly certain Canada is going to want its taxes from you.

For the IRS you must declare all your worldwide income, which includes what you made in Canada last year. If you qualify for the Overseas Earned Income Exclusion, you file a form 2555 along with your regular return to claim the exclusion on your Canadian earnings. To qualify for the exclusion, you must meet either the physical presence test (i.e. 12 consecutive months spent outside the US with no more than 30 days back in the US during this time) or the bona fide resident test (one calendar year outside the US).

If you haven't fulfilled either test by the end of 2009, but believe you will meet either of the requirements during 2010, you have two options:

1. Either you file a normal US tax return without claiming the exclusion, pay whatever US taxes are due. And then when you meet one of the two tests for taking the exclusion, you file an amended return for 2009, taking the exclusion and claiming a refund from the IRS.

2. File the paperwork for an extension of the time to file your 2009 return until the date when you will have met the requirement for taking the exclusion.

For obvious reasons, most people choose option #2 - and you can extend your filing deadline all the way until November or December of 2010 if that's what you need to do.

Full instructions are included in IRS publication 54.
Cheers,
Bev
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Old 20th January 2010, 02:15 PM
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Very thorough response, wow! Thank you for the insight.

I believe I do meet the "Overseas Earned Income Exclusion" as I was only in the USA for a couple of weeks last year, so I'll check out form 2555 when needed.

Thank you again, cheers,

Tyler

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Old 20th January 2010, 03:21 PM
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Quote:
Originally Posted by tdcush View Post
Very thorough response, wow! Thank you for the insight.

I believe I do meet the "Overseas Earned Income Exclusion" as I was only in the USA for a couple of weeks last year, so I'll check out form 2555 when needed.

Thank you again, cheers,

Tyler
Give a shout if you run into problems or have questions. It all looks really daunting the first time out, but unless you have a big income or a variety of investments, it's actually not too difficult to do the filing.
Cheers,
Bev

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Old 5th March 2010, 04:38 AM
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If it helps, you can actually have 35 days of US presence under the Physical Presence Test (w w w . irs . gov/businesses/small/international/article/0,,id=96968,00 . html)and still qualify. The rule is 330 days abroad in any 12 month window. If your assignment bridges calendar years you can use different "windows" in each tax year to maximize the exclusion you can claim.

Example: You arrive in Canada on July 1, 2008. You stay in Canada until June 30, 2009. For 2008 US purposes, you can claim from May 27 2008 to December 31 2008 as part of your assignment. In 2009, you can claim from January 1, 2009 until August 4 2009. Espescially if your company isn't nice enough to help pick up the tax tab this can save you a few $$.

Finally, if you also pay foreign taxes try calculating your return with the income exclusion and then again with foreign tax credit only. Depending on your marginal rate, credits only may be better for you.



This is my first post here, so please don't bite too hard if I broke a rule . Thanks!






Quote:
Originally Posted by Bevdeforges View Post
If you are a US citizen, or a permanent resident in the US (i.e. green card holder), you must always file a US tax return. And if you're working in Canada on a visa work permit, I'm fairly certain Canada is going to want its taxes from you.

For the IRS you must declare all your worldwide income, which includes what you made in Canada last year. If you qualify for the Overseas Earned Income Exclusion, you file a form 2555 along with your regular return to claim the exclusion on your Canadian earnings. To qualify for the exclusion, you must meet either the physical presence test (i.e. 12 consecutive months spent outside the US with no more than 30 days back in the US during this time) or the bona fide resident test (one calendar year outside the US).

If you haven't fulfilled either test by the end of 2009, but believe you will meet either of the requirements during 2010, you have two options:

1. Either you file a normal US tax return without claiming the exclusion, pay whatever US taxes are due. And then when you meet one of the two tests for taking the exclusion, you file an amended return for 2009, taking the exclusion and claiming a refund from the IRS.

2. File the paperwork for an extension of the time to file your 2009 return until the date when you will have met the requirement for taking the exclusion.

For obvious reasons, most people choose option #2 - and you can extend your filing deadline all the way until November or December of 2010 if that's what you need to do.

Full instructions are included in IRS publication 54.
Cheers,
Bev

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