Hi all, I too, didn't know I was to be filing taxes in the US. I'm trying to wade my way through years 2003-2009 (years I had income above the reporting limit) of back filing by using my Notice of Assessment that Canada Rev. so kindly sends and I've got 3 yrs where it lists my income before child care expense and then my actual taxable income. I fall well below the exemption limit in the US for all of my income. But I'm wondering how I file those years? Do I use the final taxable income amount from my assessment? Or do I use the income before child care expense and then list the expense somewhere on my 1040, and if so, where? I'm inclined to do whatever is easiest since it will just work out to 0 anyway, right? Thanks!
child care expenses
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If you have income above the filing threshold but less than the exclusion limit (currently a bit more than $90K), you want to simplify your filings to the extent possible.
Do NOT use the Canadian taxable income figure. For your US returns you have to declare your gross income (i.e. before any deductions or adjustments) from all sources worldwide. If your primary source of income is salary you should probably first fill out form 2555 (EZ if possible), where you list your gross salary income, then apply your foreign earned income exclusion. That should eliminate your salary income from taxation altogether and at the end of the form they tell you what numbers to put on which lines of the 1040.
If you do it that way, then you don't need to bother listing any expenses anywhere, because your tax is -0-. If you have interest income or income from any other sources, you'll need to declare that, too (and that income isn't subject to the exclusion) - but just follow the instructions line by line over to the second side of the form 1040. You get to subtract your personal exemption and your standard deduction, which should bring your total taxable income for the US to -0- and you're all done.
If you have bank accounts outside the US with a total of $10,000 or more, then you'll also have to file a Schedule B with the appropriate boxes checked off at the bottom of the form and you'll be expected to file an FBAR form with the Treasury, listing your bank accounts and their high balance for the year. (Don't worry too much about this - a good faith estimate will do. Bump the amount up a bit if you're not certain. The information on the Treasury form does NOT result in taxes due and they will hardly hassle you for overestimating your bank balances.)
Cheers,
Bev
Do NOT use the Canadian taxable income figure. For your US returns you have to declare your gross income (i.e. before any deductions or adjustments) from all sources worldwide. If your primary source of income is salary you should probably first fill out form 2555 (EZ if possible), where you list your gross salary income, then apply your foreign earned income exclusion. That should eliminate your salary income from taxation altogether and at the end of the form they tell you what numbers to put on which lines of the 1040.
If you do it that way, then you don't need to bother listing any expenses anywhere, because your tax is -0-. If you have interest income or income from any other sources, you'll need to declare that, too (and that income isn't subject to the exclusion) - but just follow the instructions line by line over to the second side of the form 1040. You get to subtract your personal exemption and your standard deduction, which should bring your total taxable income for the US to -0- and you're all done.
If you have bank accounts outside the US with a total of $10,000 or more, then you'll also have to file a Schedule B with the appropriate boxes checked off at the bottom of the form and you'll be expected to file an FBAR form with the Treasury, listing your bank accounts and their high balance for the year. (Don't worry too much about this - a good faith estimate will do. Bump the amount up a bit if you're not certain. The information on the Treasury form does NOT result in taxes due and they will hardly hassle you for overestimating your bank balances.)
Cheers,
Bev
Thanks Bev. I'm just so overwhelmed and I think I'm making it harder than I need to because I want to do it right but don't really understand it. I filled out the FBAR's yesterday (only had 3 yrs that I needed to fill those out 2009,10 and 11, but had no idea about having to fill out a schedule B. Do I only fill out a schedule B for the same yrs that I'm filling out FBARS? I'm sorry, I think that's what you're saying so that means the only year I would have to do a Schedule B is yrs 2009. I haven't even run across that form yet. GAh! I typed it into the "previous years forms" search spot on the IRS.gov site and it said not found? So I'm not even sure where to locate it. Hint please? 
I tried to fill out year 2003 and used 2555-ez to do that and ended up putting zeroes in every spot except 3 places on the entire form. And I'm thinking to myself, it can't be that easy right? I must have missed something. It's so confusing flipping back and forth through sites of instructions and manuals, that I keep getting all mixed up. And my situation isn't even difficult!
I tried to fill out year 2003 and used 2555-ez to do that and ended up putting zeroes in every spot except 3 places on the entire form. And I'm thinking to myself, it can't be that easy right? I must have missed something. It's so confusing flipping back and forth through sites of instructions and manuals, that I keep getting all mixed up.
And my situation isn't even difficult!Ok, so a lightbulb went off and I typed in Form 1040 (Schedule B) and found the forms...but, they go from 1969 and skip to 2009...So, do I use the 1969 form to fill out 2003 to 2008 paperwork and then use 2009 for yr 2009 and so forth?
btw, I guess I do need to fill out Schedule B regardless if I have to do FBAR for that same yr because I had foreign accounts, but only FBARs if those accounts total 10K or more...so I answered that question for myself that I asked above.
btw, I guess I do need to fill out Schedule B regardless if I have to do FBAR for that same yr because I had foreign accounts, but only FBARs if those accounts total 10K or more...so I answered that question for myself that I asked above.
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Don't sweat the Schedule B if you've already done the FBARs. It's only for the years that you meet the requirements to file FBARs (which weren't called that until just recently).
You solved your own problem by associating the Schedule B with the 1040 form. See, it isn't really THAT difficult!
That sounds about right - having 0's for most lines on the 1040. You have to use a 1040 (and not the "EZ" or other short form version) if you are filing a 2555, so there are lots of leftover lines. As long as you've declared all your sources of income and the tax due turns out to -0-, then you've probably done it right. :clap2:
Cheers,
Bev
You solved your own problem by associating the Schedule B with the 1040 form. See, it isn't really THAT difficult!
That sounds about right - having 0's for most lines on the 1040. You have to use a 1040 (and not the "EZ" or other short form version) if you are filing a 2555, so there are lots of leftover lines. As long as you've declared all your sources of income and the tax due turns out to -0-, then you've probably done it right. :clap2:
Cheers,
Bev
If you only have earned income the forms really are easy.
Do you have RESPs for your kids? I had unrealized capital gains on them that I had to declare. Thankfully the foreign tax credit was sufficient that I did not owe taxes on them to the US.
Is there a reason why you are filing back to 2003? Curious because I only did back to 2005.
I personally would do the Schedule B for any years where you had foreign accounts even if you did not have to file a FBAR. It was a moot point for me as I had FBARs every year.
Do you have RESPs for your kids? I had unrealized capital gains on them that I had to declare. Thankfully the foreign tax credit was sufficient that I did not owe taxes on them to the US.
Is there a reason why you are filing back to 2003? Curious because I only did back to 2005.
I personally would do the Schedule B for any years where you had foreign accounts even if you did not have to file a FBAR. It was a moot point for me as I had FBARs every year.
I've been hemming and hawing on what years to do. I moved to Canada in 1998 and filed my 2008 returns with the US then as I made income there. Never even thought to check to see if I would have to file if I lived abroad and made no income in the US. Then for 1999-2001 I didn't file anywhere because I didn't have any income at all. In 2000 I became a Permanent Resident of Canada and was able to work so in 2002 I got a pt time job, filed in Canada. I became a Canadian Citizen in 2006. It appears that in 2003-2009 I made enough to have to file in the US now that I know about the requirements and looked back to see what the threshold for filing those years were. I was filing in Canada though. Then again in 2010 and 2011 I didn't work so, again am not required to file anywhere.
So, I guess the reason I want to file from 2003 to 2009 is because of my own conscience because those are the years I was suppose to file...I thought about just doing the last 5 yrs but thought it would look weird filing 2007,2008 and 2009 and nothing again for 2010 and 2011. Right? Or maybe I should rethink this and give them the 07,08,09 with a letter saying I didn't have income for 10 and 11 as I am renouncing my Citizenship anyway...
So, I guess the reason I want to file from 2003 to 2009 is because of my own conscience because those are the years I was suppose to file...I thought about just doing the last 5 yrs but thought it would look weird filing 2007,2008 and 2009 and nothing again for 2010 and 2011. Right? Or maybe I should rethink this and give them the 07,08,09 with a letter saying I didn't have income for 10 and 11 as I am renouncing my Citizenship anyway...
I think that is what I would do too.
Are you maintaining your citizenship? I wanted to do 6 years before I renounced.
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If you didn't have income exceeding the filing threshold then you don't need to file. And you don't need to send them anything indicating why you aren't filing.
If you're only filing to be able to say you've filed a certain number of years before renouncing, then just file a 1040 for the year concerned, filling in the identification information (name, address, social security, filing status) and just write "no income" across the front of the form. (See, wasn't that easy?)
Cheers,
Bev
If you're only filing to be able to say you've filed a certain number of years before renouncing, then just file a 1040 for the year concerned, filling in the identification information (name, address, social security, filing status) and just write "no income" across the front of the form. (See, wasn't that easy?)
Cheers,
Bev
haha, yeah, that part is easy!
I honestly can't figure these forms out. I have EI (from maternity leave) benefits to report as well as one year of self employment when I did some babysitting in my home, but can't for the life of me figure out the 1116 form that I guess I'm suppose to use.
I give up.
I honestly can't figure these forms out. I have EI (from maternity leave) benefits to report as well as one year of self employment when I did some babysitting in my home, but can't for the life of me figure out the 1116 form that I guess I'm suppose to use.
I give up.
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The 1116 form is only for claiming credit for taxes paid on the non-salary income. Self-employment counts as "salary" income and so is subject to the FEIE on form 2555. Benefits aren't. But run the numbers without bothering with the form 1116 first. If the result comes out to 0 tax due, you don't need the extra form.
Cheers,
Bev
Cheers,
Bev
I feel so dense! What do you mean by "run the numbers without bothering with the form" ? Dont you have to do the forms to figure out what the numbers are to even run them through 1040? See...I'm hopeless.
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I saw your other question - no problem.
Yeah, just try doing the forms without bothering with the 1116. If you wind up owing -0- taxes, you don't even bother with the form 1116. The less paper you wind up having to file, the better!
Cheers,
Bev
Yeah, just try doing the forms without bothering with the 1116. If you wind up owing -0- taxes, you don't even bother with the form 1116. The less paper you wind up having to file, the better!
Cheers,
Bev
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