Add Foreign Income, Pay Less Taxes???
Feb 10th 2001, 5:25 am
#1
Guest
Posts: n/a
Bride to be born and raised in Canada, moves to US at the end of March 2000. We wed on
April 15th, 2000 :O) . Bride works right up until moving date, earning $4476 (US$). Bride
finds work in US after wedding. Earns $8481 through 12-31-2000 in US.
TaxAct2000 allows for claim of Foreign Earned Income, as does State of Indiana, and
generates Form 2555. This filing REDUCES tax liability (filing married, joint) by $670
Federal and $216 state.
This makes no sense to me. Her Canadian income was earned while she lived in Canada and
was taxed in Canada. A Canadian filing is unnecessary due to her status as a non-resident
and her low income there (US INS status is K1-AOS pending). Am I wrong in thinking that
her Canadian income can or should be reported? This seems to fall into the
too-good-to-be-true category.
--
Mark Warner lose inhibitions. when replying
April 15th, 2000 :O) . Bride works right up until moving date, earning $4476 (US$). Bride
finds work in US after wedding. Earns $8481 through 12-31-2000 in US.
TaxAct2000 allows for claim of Foreign Earned Income, as does State of Indiana, and
generates Form 2555. This filing REDUCES tax liability (filing married, joint) by $670
Federal and $216 state.
This makes no sense to me. Her Canadian income was earned while she lived in Canada and
was taxed in Canada. A Canadian filing is unnecessary due to her status as a non-resident
and her low income there (US INS status is K1-AOS pending). Am I wrong in thinking that
her Canadian income can or should be reported? This seems to fall into the
too-good-to-be-true category.
--
Mark Warner lose inhibitions. when replying
Feb 10th 2001, 12:07 pm
#2
Guest
Posts: n/a
TaxAct2000 allows for claim of Foreign Earned Income, as does State
> of Indiana, and generates Form 2555. This filing REDUCES tax liability (filing married,
> joint) by $670 Federal and $216 state.
It shouldn't alter your taxes at all. You add it in then take it out before any tax
calculations take place. It should come out exactly the same as it would if you didn't
include it at all. Are you being sure to include the Canadian income on line 7?
> This makes no sense to me. Her Canadian income was earned while she lived in Canada and
> was taxed in Canada. A Canadian filing is unnecessary due to her status as a
> non-resident and her low income there (US INS status is K1-AOS pending).
??? Since when does Canada have a minimum filing amount? I have never heard of this.
However, if it is the case that she technically doesn't have to file (which I doubt) she
should anyway if she had any kind of income tax/CPP/EI deducted from her cheque so that
she can get a refund.
> Am I wrong in thinking that her Canadian income can or should be reported? This seems to
> fall into the too-good-to-be-true category.
You are not wrong. In fact, it *must* be reported if you are filing jointly. I just wonder
if you did the calculations correctly....
> of Indiana, and generates Form 2555. This filing REDUCES tax liability (filing married,
> joint) by $670 Federal and $216 state.
It shouldn't alter your taxes at all. You add it in then take it out before any tax
calculations take place. It should come out exactly the same as it would if you didn't
include it at all. Are you being sure to include the Canadian income on line 7?
> This makes no sense to me. Her Canadian income was earned while she lived in Canada and
> was taxed in Canada. A Canadian filing is unnecessary due to her status as a
> non-resident and her low income there (US INS status is K1-AOS pending).
??? Since when does Canada have a minimum filing amount? I have never heard of this.
However, if it is the case that she technically doesn't have to file (which I doubt) she
should anyway if she had any kind of income tax/CPP/EI deducted from her cheque so that
she can get a refund.
> Am I wrong in thinking that her Canadian income can or should be reported? This seems to
> fall into the too-good-to-be-true category.
You are not wrong. In fact, it *must* be reported if you are filing jointly. I just wonder
if you did the calculations correctly....
Feb 10th 2001, 3:10 pm
#3
Guest
Posts: n/a
> You are not wrong. In fact, it *must* be reported if you are filing jointly. I just
> wonder if you did the calculations correctly....
Perdue gave all the right answers. Did you just pop it into TurboTax or something (I
noticed you said it generated Form 2555) I tried Turbo Tax first, and it didn't seem
quite right, so I did it by hand. After I did it by hand I realized I had answered one
question wrong with Turbo Tax, put it through the program again and got the same result I
got by hand.
Try doing it step by step by hand. It's not that hard, and it'll be good to see
what you get.
Betastar
> wonder if you did the calculations correctly....
Perdue gave all the right answers. Did you just pop it into TurboTax or something (I
noticed you said it generated Form 2555) I tried Turbo Tax first, and it didn't seem
quite right, so I did it by hand. After I did it by hand I realized I had answered one
question wrong with Turbo Tax, put it through the program again and got the same result I
got by hand.
Try doing it step by step by hand. It's not that hard, and it'll be good to see
what you get.
Betastar
Feb 10th 2001, 6:45 pm
#4
Guest
Posts: n/a
> > TaxAct2000 allows for claim of Foreign Earned Income, as does State of Indiana, and
> > generates Form 2555. This filing REDUCES tax liability (filing married, joint) by $670
> > Federal and $216 state.
>
> It shouldn't alter your taxes at all. You add it in then take it out before any tax
> calculations take place. It should come out exactly the same as it would if you didn't
> include it at all. Are you being sure to include the Canadian income on line 7?
>
Boy, am I stupid. I didn't enter my wife's T4 (Canadian W2) into the system. When I do so,
it will add that much to our income, which will then be immediately reduced by filing for
the Form 2555 Foreign Earned Income credit. In fact, under these circumstances, I doubt I
will include either.
I knew it was too good to be true. That will teach me to be messing with taxes at 1:00am.
--
Mark Warner lose inhibitions. when replying
> > generates Form 2555. This filing REDUCES tax liability (filing married, joint) by $670
> > Federal and $216 state.
>
> It shouldn't alter your taxes at all. You add it in then take it out before any tax
> calculations take place. It should come out exactly the same as it would if you didn't
> include it at all. Are you being sure to include the Canadian income on line 7?
>
Boy, am I stupid. I didn't enter my wife's T4 (Canadian W2) into the system. When I do so,
it will add that much to our income, which will then be immediately reduced by filing for
the Form 2555 Foreign Earned Income credit. In fact, under these circumstances, I doubt I
will include either.
I knew it was too good to be true. That will teach me to be messing with taxes at 1:00am.
--
Mark Warner lose inhibitions. when replying
Feb 10th 2001, 10:03 pm
#5
Guest
Posts: n/a
Don't think you have a choice not to include either. If you don't think that the US IRS
doesn't check with Canada think again. She has to file in Canada as well in the US. If she
pays taxes in Canada on the money earned in Canada she will not have to pay tax on that
money in the US. However, if she does not pay taxes in Canada on Canadian earned income
she will have to pay US taxes on it.
Rita
in message
> >
> > > TaxAct2000 allows for claim of Foreign Earned Income, as does
State
> > > of Indiana, and generates Form 2555. This filing REDUCES tax liability (filing
> > > married, joint) by $670 Federal and $216 state.
> >
> > It shouldn't alter your taxes at all. You add it in then take it
out
> > before any tax calculations take place. It should come out exactly
the
> > same as it would if you didn't include it at all. Are you being
sure
> > to include the Canadian income on line 7?
> >
>
> Boy, am I stupid. I didn't enter my wife's T4 (Canadian W2) into the
system.
> When I do so, it will add that much to our income, which will then be immediately
> reduced by filing for the Form 2555 Foreign Earned Income
credit. In
> fact, under these circumstances, I doubt I will include either.
>
> I knew it was too good to be true. That will teach me to be messing
with taxes
> at 1:00am.
>
> --
> Mark Warner lose inhibitions. when replying
doesn't check with Canada think again. She has to file in Canada as well in the US. If she
pays taxes in Canada on the money earned in Canada she will not have to pay tax on that
money in the US. However, if she does not pay taxes in Canada on Canadian earned income
she will have to pay US taxes on it.
Rita
in message
> >
> > > TaxAct2000 allows for claim of Foreign Earned Income, as does
State
> > > of Indiana, and generates Form 2555. This filing REDUCES tax liability (filing
> > > married, joint) by $670 Federal and $216 state.
> >
> > It shouldn't alter your taxes at all. You add it in then take it
out
> > before any tax calculations take place. It should come out exactly
the
> > same as it would if you didn't include it at all. Are you being
sure
> > to include the Canadian income on line 7?
> >
>
> Boy, am I stupid. I didn't enter my wife's T4 (Canadian W2) into the
system.
> When I do so, it will add that much to our income, which will then be immediately
> reduced by filing for the Form 2555 Foreign Earned Income
credit. In
> fact, under these circumstances, I doubt I will include either.
>
> I knew it was too good to be true. That will teach me to be messing
with taxes
> at 1:00am.
>
> --
> Mark Warner lose inhibitions. when replying
Feb 12th 2001, 7:38 pm
#6
Guest
Posts: n/a
Please elaborate for me Perdue...<if she had any kind of income tax/CPP/EI deducted from
her cheque so that she can get a refund.> Carol - Canadian
>
> > TaxAct2000 allows for claim of Foreign Earned Income, as does State of Indiana, and
> > generates Form 2555. This filing REDUCES tax liability (filing married, joint) by $670
> > Federal and $216 state.
>
> It shouldn't alter your taxes at all. You add it in then take it out before any tax
> calculations take place. It should come out exactly the same as it would if you didn't
> include it at all. Are you being sure to include the Canadian income on line 7?
>
> > This makes no sense to me. Her Canadian income was earned while she lived in Canada
> > and was taxed in Canada. A Canadian filing is unnecessary due to her status as a
> > non-resident and her low income there (US INS status is K1-AOS pending).
>
> ??? Since when does Canada have a minimum filing amount? I have never heard of this.
> However, if it is the case that she technically doesn't have to file (which I doubt) she
> should anyway if she had any kind of income tax/CPP/EI deducted from her cheque so that
> she can get a refund.
>
> > Am I wrong in thinking that her Canadian income can or should be reported? This seems
> > to fall into the too-good-to-be-true category.
>
> You are not wrong. In fact, it *must* be reported if you are filing jointly. I just
> wonder if you did the calculations correctly....
>
her cheque so that she can get a refund.> Carol - Canadian
>
> > TaxAct2000 allows for claim of Foreign Earned Income, as does State of Indiana, and
> > generates Form 2555. This filing REDUCES tax liability (filing married, joint) by $670
> > Federal and $216 state.
>
> It shouldn't alter your taxes at all. You add it in then take it out before any tax
> calculations take place. It should come out exactly the same as it would if you didn't
> include it at all. Are you being sure to include the Canadian income on line 7?
>
> > This makes no sense to me. Her Canadian income was earned while she lived in Canada
> > and was taxed in Canada. A Canadian filing is unnecessary due to her status as a
> > non-resident and her low income there (US INS status is K1-AOS pending).
>
> ??? Since when does Canada have a minimum filing amount? I have never heard of this.
> However, if it is the case that she technically doesn't have to file (which I doubt) she
> should anyway if she had any kind of income tax/CPP/EI deducted from her cheque so that
> she can get a refund.
>
> > Am I wrong in thinking that her Canadian income can or should be reported? This seems
> > to fall into the too-good-to-be-true category.
>
> You are not wrong. In fact, it *must* be reported if you are filing jointly. I just
> wonder if you did the calculations correctly....
>
