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Discussion Starter · #1 ·
US citizen living in Canada as a PR.

Have not filed US taxes since I came to Canada six years ago.:eek:

Do I need to fill out any other forms than the 1040, 2555, and 1116 for the years I plan to file? From the forms I've read I think this is about it.

I do not have a TFSA. I only make 20k a year. I have no children. I am not married, but living common law with a Canadian citizen who has no ties to the U.S.

Also, after skimming through Pub 54 and Pub 17, I did not earn enough money during my first 3 years in Canada to meet the minimum amount required for filing purposes. So, I just don't file? Immigration purposes prohibited me from working the first 2 1/2 years. I have been employed the last 3 1/2.

Do I have to be able to prove to the IRS that I did not make enough money in those first 3 years?

Thanks in advance for any help, it is appreciated. :tea: If you need more details to answer any question I will gladly provide that.
 

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US citizen living in Canada as a PR.

Have not filed US taxes since I came to Canada six years ago.:eek:

Do I need to fill out any other forms than the 1040, 2555, and 1116 for the years I plan to file? From the forms I've read I think this is about it.

I do not have a TFSA. I only make 20k a year. I have no children. I am not married, but living common law with a Canadian citizen who has no ties to the U.S.

Also, after skimming through Pub 54 and Pub 17, I did not earn enough money during my first 3 years in Canada to meet the minimum amount required for filing purposes. So, I just don't file? Immigration purposes prohibited me from working the first 2 1/2 years. I have been employed the last 3 1/2.

Do I have to be able to prove to the IRS that I did not make enough money in those first 3 years?

Thanks in advance for any help, it is appreciated. :tea: If you need more details to answer any question I will gladly provide that.
Just figured this out myself so this is far from professional!
You might need schedule B if you have interest income or if you have an aggregate balance of $10,000 in the bank(even if you are joint with your partner) you would have to file an FBAR. If you have just earned income from a T4, you shouldn't need 1116, the 2555 and standard deductions should bring your taxable income to zero. You can probably do the 2555EZ as well. If you have other types of income, self-employment, or capital gains, rental etc. there are more forms.

I don't know about your other question for the years you didn't work, maybe someone else will help.
 

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Discussion Starter · #3 ·
Just figured this out myself so this is far from professional!
You might need schedule B if you have interest income or if you have an aggregate balance of $10,000 in the bank(even if you are joint with your partner) you would have to file an FBAR. If you have just earned income from a T4, you shouldn't need 1116, the 2555 and standard deductions should bring your taxable income to zero. You can probably do the 2555EZ as well. If you have other types of income, self-employment, or capital gains, rental etc. there are more forms.

I don't know about your other question for the years you didn't work, maybe someone else will help.
Thanks for the reply. Our bank accounts are below 10,000 so I'm good there. I don't have any earned income here outside what is on my T4 so thanks for the 1116 tip.

I forgot to mention that I do have some mutual funds in the US. I'm not sure what forms I'd need for that...the interest earned on that is minimal. I'm sure they'll want to know about it and I don't want to hide it obviously, but, I'm not sure what do there.

Maybe I can get some more input from others. I appreciate your help. :)
 

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Thanks for the reply. Our bank accounts are below 10,000 so I'm good there. I don't have any earned income here outside what is on my T4 so thanks for the 1116 tip.

I forgot to mention that I do have some mutual funds in the US. I'm not sure what forms I'd need for that...the interest earned on that is minimal. I'm sure they'll want to know about it and I don't want to hide it obviously, but, I'm not sure what do there.

Maybe I can get some more input from others. I appreciate your help. :)
Sounds like you're on the right track. You don't need to bother filing for those years that your gross income was below the threshold levels.

Report the mutual fund interest along with any other interest you have (just total it up on the appropriate line on the 1040 form). The 2555 should "exclude" all your salary income, leaving only your interest income. You then take your personal exemption and standard deduction against this - and that should bring your taxable income down to 0.

Do be careful what you report as salary income, though. Not sure about Canada, but many countries allow you to deduct social insurances from your salary before you figure your taxes. The US really wants your gross salary - before any and all social insurance or retirement fund deductions are taken. You sometimes have to back into this number from the tax documents your home country provides.
Cheers,
Bev
 

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Discussion Starter · #5 ·
Sounds like you're on the right track. You don't need to bother filing for those years that your gross income was below the threshold levels.

Report the mutual fund interest along with any other interest you have (just total it up on the appropriate line on the 1040 form). The 2555 should "exclude" all your salary income, leaving only your interest income. You then take your personal exemption and standard deduction against this - and that should bring your taxable income down to 0.

Do be careful what you report as salary income, though. Not sure about Canada, but many countries allow you to deduct social insurances from your salary before you figure your taxes. The US really wants your gross salary - before any and all social insurance or retirement fund deductions are taken. You sometimes have to back into this number from the tax documents your home country provides.
Cheers,
Bev
Thanks for the reply.

So, if I'm not filing for specific years do I need to explain to them why? For some reason I just have this picture of someone sitting in an office looking over my forms and noticing that I haven't filed in years, then, digging into it further and inquiring as to why. I have nothing to hide, but, just curious how that all works out.

One thing is for sure, once I get all this squared out I won't be letting it slip again! :eek:

Cheers for the help. :)
 

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There are plenty of folks who have legitimate reasons for not filing in a year when their income was below the filing threshold. If you were "suddenly" filing with $250,000 in salary income and you're 47 years old, then yeah, they might ask why you haven't been filing before. But in your case, it sounds like there isn't much for them to worry about, and honestly, they don't devote an awful lot of time to each individual return as it is filed.
Cheers,
Bev
 

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Thanks for the reply. Our bank accounts are below 10,000 so I'm good there. I don't have any earned income here outside what is on my T4 so thanks for the 1116 tip.

I forgot to mention that I do have some mutual funds in the US. I'm not sure what forms I'd need for that...the interest earned on that is minimal. I'm sure they'll want to know about it and I don't want to hide it obviously, but, I'm not sure what do there.

Maybe I can get some more input from others. I appreciate your help. :)

Just to be clear, the total of all your bank accounts combined, not just individual accounts, has to be below $10,000 at all times throughout the year, not just at year end.
 

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Discussion Starter · #8 ·
Thanks Bev, and Quincy. I feel a lot better now and will move ahead to getting those forms filled out and sent in.

Quincy, the total of all accounts has been less than 10. I appreciate that bit of info. I'm paying off school loans so most of our spare money goes to those! D'oh!

Thanks again. Cheers.
 

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Dependents

Really informative posts here. I was curious if there is any benefit to claiming dependents (my two kids) if my taxable income is zero after 2555EZ? I prefer to include the minimum information? Related question because my canadian income is a scholarship (25K CDN), in theory, I probably only need to declare part of this. But again is there any point if Im already at zero income???

Just say I feel relieved. I just got back from a meeting with a lawyer/CPA and they were talking 3K for my tax returns...
 

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You may be very lucky. Did you know you might do better than zero, i.e. get money from the IRS? That's because there are some refundable tax credits that can sometimes apply to U.S. expatriates in certain circumstances. In your case you should look into the Earned Income Tax Credit (EITC), the Additional Child Tax Credit, and the American Opportunity Tax Credit in particular.

For example, I think you can get some EITC dollars from the IRS if you have some earned income (such as part time work you're doing while attending university), if your income is not too high, if you can claim your two children as dependents, and if you do not take the foreign earned income/foreign housing exclusions (or if you take only what you need). The AOTC may apply if, in particular, you are attending an educational institution recognized by the U.S. Department of Education. (Many Canadian and other non-U.S. institutions are.)

So, to answer your question, yes, it could be highly advantageous to claim your children as dependents. The EITC is not available to U.S. expatriates without dependent children. And yes, you will want to deduct educational expenses to the extent possible in these circumstances.
 

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Personally, once the tax liability gets to 0 I wouldn't mess with trying to claim anything back. There are darned few tax credits in the US that are paid out to those who owe no taxes or who have no taxable income.

Take a look through Publication 54 (for US taxpayers living abroad) to check, but I'm fairly certain that the EITC isn't available for those taking the FEIE. (Just checked and to claim the EITC, the dependent must have lived with the taxpayer IN THE US for at least half the year.) If married, you also must be filing jointly.
Cheers,
Bev
 

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Personally, once the tax liability gets to 0 I wouldn't mess with trying to claim anything back. There are darned few tax credits in the US that are paid out to those who owe no taxes or who have no taxable income.

Take a look through Publication 54 (for US taxpayers living abroad) to check, but I'm fairly certain that the EITC isn't available for those taking the FEIE. (Just checked and to claim the EITC, the dependent must have lived with the taxpayer IN THE US for at least half the year.) If married, you also must be filing jointly.
Cheers,
Bev
You two are awesome!
 

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Bev, you're quite correct about the U.S. residency requirement for the child(ren) to qualify for the EITC. Mea culpa.

The other refundable tax credits (AOTC and ACTC) may still apply, however. I disagree about settling for zero if there's a better legal outcome available. If General Electric can pay a negative effective tax rate (i.e. get paid by the IRS for existing), then there should be no problem whatsoever if an individual of modest means can also get some money from the IRS. Millions of Americans have a negative personal income tax rate, and if a U.S. expatriate or three also gets that benefit, that's wonderful.

On edit: The maximum possible AOTC refundable benefit available to a U.S. expatriate is $1,000. The maximum possible ACTC benefit is $1,000 per child, although the calculation is a bit complicated. Thus as much as $3,000 is at stake. That's not a small amount of money to someone earning about $25,000 per year, so we shouldn't so quickly dismiss it IMHO.

On second edit: Here's a good article summarizing the refundable tax credits available to certain U.S. expatriates.
 

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I believe I am ineligible if I fill married/separately. I dont want to report my wives income and thus prefer to fill separately. Again she being a NRA
 

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3000$ is no small sum regardless of your income! Thanks for the link. To clarify, I am doing back taxes. Do I forfeit any tax refund?

Also. I was a graduate student therefore "Caveat #2: graduate students do not qualify for this credit. The Tax Relief and Job Creation Act of 2010 extends the AOTC for two additional years until Dec. 31, 2012" applies I assume!"
 

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As a follow up, you could try running your taxes both with and without the foreign exclusions and see how that works. (You'd use the foreign tax credit instead.) Canada is a relatively high tax country, so that may work for you depending on your income sources and their taxability. Using the FTC would also keep the ACTC available if you qualify. Note that excess foreign tax credits can be carried backward and forward to other tax years to some degree, and that might be useful.

That article I linked to implies that it's possible to exclude only part of your foreign earned income, even if you earn below the exclusion limit and even if you are a 100% expatriate (full time outside the U.S.) I'm not exactly sure how they do that, but it's an intriguing idea. Before you even explore that, see if the FTC path works since it's much more conventional.

I hope I'm making sense. This stuff can be confusing. :D
 

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Thanks BBCWatcher...

Any insight what they are referring to here @ thetaxesforexpats site " Additional Child Tax Credit – has the same requirement that regular child tax credit. The caveat: If your salary is fully excluded through the foreign earned income exclusion, you will not receive the refund. Expert tax preparers (read: us) know how to adjust the amount of excluded income in order to keep the taxpayer below the taxable level while making him qualified for the additional child tax credit."

The way I am currently thinking of filing my income would be zero because its well below the 92K federal earned income exclusion......

Thanks again
 

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Am I obliged to use the FEIE? or the Tax Credit? If I don't as far as I can tell my taxes would be under 1000$ meaning that I could in theory get a refund with the ACTC
 
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