# US Citizen in Canada Filing Taxes in US For the First Time Since 2005



## uscitizen2013

Hi! I'm a US citizen living in Canada since I married a Canadian citizen in 2005- we have small children. I was unaware that I had to file taxes in the US and therefore have not done so since I moved here. I have filed taxes with the CRA every year that I have been here. What do I need to do to get my file up to date with the IRS? 

Here is some information about my situation-
-never made more than $45000 a year, usually substantially less
-bought a home in 2012
-some years had more than $10000 in our accounts as I saved for my school and our downpayment
-no investments

Does my wife need to file anything? She is a Canadian citizen who has never lived in the US. 

How do I go about reporting my bank accounts? Do I use bank statements and estimate or is there some method for this? 

How many years do I need to file taxes for? 

It is all very confusing and it is not in our budget to get an accountant to help.

Thanks!!


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## Bevdeforges

You are hardly the first US citizen resident abroad to find themselves in exactly the same situation.

Simplest way to settle it all is to file the current year (i.e. 2012 - due June 15th, thanks to the automatic 2 month deadline extension for those living abroad) plus three years in arrears (2011, 2010 and 2009). As long as those show no or little tax due, that should clear your record and then you just file going forward.

Your Canadian wife has no reason to have to file anything. She has no US tax filing obligation. You should probably file married, filing separately. Claim the FEIE to cover your earned income (i.e. salary). 

As far as the FBAR reporting is concerned, it is strictly speaking only a report of foreign accounts and has no impact on your income tax due. Personally, I would simply file the current year, but if it helps you sleep at night, you can file up to 6 years in arrears - but only for those years where your accumulated foreign account balance was greater than $10,000 US. To determine the high balance for the year, you are permitted to report only the high month-end balance based on your bank statements during the year. Or, you can make a good faith estimate of what the actual high balance was (if you think it may have been higher than the month end balances you have records for). There is no penalty for over-reporting.

File your returns (and FBARS) simply and in good faith and chances are you'll run into no problems whatsoever. Download Publication 54 from the IRS website (Internal Revenue Service) for all the instructions regarding filing from abroad.
Cheers,
Bev


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## BBCWatcher

He might be in the refundable tax credits category (i.e. better than zero). There are other threads here about the Making Work Pay Tax Credit (tax years 2009 and 2010 -- don't delay since 2009 refunds will be gone if you don't get your overseas tax return into the IRS by June 15) and Additional Child Tax Credit.


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## DavidMcKeegan

Since it doesn't sound like any tax will be owed, I would say you should be ok filing just the last three years (2010, 2011, and 2012). Although it might not seem like much, one less year can make a big difference in the amount of time it takes you to gather your documents and file. Should hopefully save you a bit of work!


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## BBCWatcher

Except that's not what the IRS demands in its streamlined compliance program, and 2009 was an important year for refundable tax credits.

Why don't we try following the IRS's instructions, eh?


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## maz57

When I found out about this mess a couple of years ago, I filed only the current year's FBAR (late by a few weeks because that's when I found out). Later that fall I filed for the current year (about four months late because I wasn't going to let it ruin my summer) plus the two previous years. I owed no taxes. The only response I ever got from the IRS was a check for 300 bucks. (That was for the Bush economic stimulus which I dutifully spent in the US so no guilt there.) 

The so called "streamlined procedure" is not mandatory. It is, however, a good way to make the whole situation drag on a whole lot longer. As for following any of the IRS's instructions, we all try but it's easier said than done!

I filed "married filing separately" and left my Canadian spouse out of harm's way. As for the kids and possible refundable credits I believe they have to be US citizens (sounds like they are) but they need to have SS numbers. If they are not yet registered with the US government you may want to consider carefully whether it's worth taking that step as that puts them on the US radar as potential taxpayers down the road. This is particularly true if they were born in Canada. If you don't need to claim them as dependants to zero out your taxes and aren't desperate for the cash it might be better to just leave well enough alone. If they decide they want to claim their US citizenship when they are adults they will be able to do so.

No need to panic---many have been down the road you have just discovered. Take your time, do your research. You don't need an accountant as your financial affairs seem pretty simple. If you have not yet gotten your Canadian citizenship, get the ball rolling if you want to do so. That's your best protection against the US government.

It sounds as though you have minimal investments so now is a good time to get this straightened out. As a US citizen in Canada the RRSP is about the only viable investment option; everything else opens up a reporting nightmare and is fully taxable by the US. TFSA's and RESP's can go in the wife's name so they are out of the reach of the IRS and don't even need to be reported.


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## Bevdeforges

Though I have been on Maz57's case in the past for a bit of "over zealousness" I have to say I agree with him/her this time.

If your goal is to get straight with the IRS and minimize the hassle factor, just start filing the current year. Don't bother with getting SS numbers or ITINs for your family members and be done with it. Trying to claim back refunds may well just serve to flag your returns for later problems.

Besides, according to an article in last Sunday's NY Times, the IRS is hurting big time from this sequester nonsense back in the US. Agents will be taking "furlough" time at the end of the month and as it is, the offices are seriously overworked. Chances are they are going to be out looking for big-time offenders and not trying to trawl through foreign bank accounts of overseas residents.
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> Chances are they are going to be out looking for big-time offenders and not trying to trawl through foreign bank accounts of overseas residents.


OK, if that is so, it's _an even better time than usual_ to collect the refundable tax credits one is entitled to if you qualify.

....Instead of second guessing the IRS, how about just making the best effort to follow their rules as carefully as possible? That approach seems simpler and much more sanity-preserving/worry-reducing.


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## DavidMcKeegan

maz57 said:


> The so called "streamlined procedure" is not mandatory. It is, however, a good way to make the whole situation drag on a whole lot longer. As for following any of the IRS's instructions, we all try but it's easier said than done!


I agree with this statement, the Streamlined program is not mandatory! If you just want to get caught up with your taxes, and be done worrying, then file the last three years (although it would be nice to just file the current year, It personally wouldn't set my mind at ease, and I would stick with three). 

On the RARE chance that the IRS needs more information, they will let you know, and you can file the additional year. But why go through the extra work (and sometimes the hassle of formally entering any IRS program) if you don't have too?


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## maz57

Gosh, Bev! I never thought you were "on my case". Just a slight disagreement between reasonable people. For the record, I think your straightforward, real world, common-sense advice has been invaluable to a great many on this forum including myself and I can't thank you enough for that!


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## Vangrrl

Lots of good advice already posted - just wanted to reiterate that you are not alone!

There was no "streamlined" procedure when I started this process. I chose quiet disclosure - I submitted 3 years of previous 1040's and the current year (2010) all at once.

I am in Vancouver - I can't say I was impressed with any of the local accountants I talked to back then, although I'm sure in the past 3 years they know more about the issue than they did back then. All I know is that had I gone with any of the accountants I spoke with, I'd have been out a lot of money for certain, and quite possibly embroiled in a long process of "amnesty". 

In the end, at the recommendation of a poster here, I opted to use an online based accounting company which charged my about $250/return (Greenbacks - just google them). I gave the accountant the info I wanted to declare, and he translated it into a 1040. He didn't seem to know any more than I did (eg. I had to tell him I needed to file a form 8891 for my RRSPs) but he could quickly fill out the forms and that's what I needed and for me it was money well spent. 

Once I had those initial returns prepared and an idea of what the completed forms will look like, I've been able to do my own after that using Turbotax.

I'm not sure if older threads are viewable here, but there was a lot of good information here that was essential for me to get through the process.

Good luck!


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## uscitizen2013

I did three years of back taxes and the current year's taxes. I did them as straightforward as possible, didn't claim my spouse or kids at all. Just wrote NRA on the line for my wife's name. The only thing on there is my income, and I didn't even bother to claim the $70 interest I made on my savings account. I hope this will be ok, there were only the forms and no supporting documents in the envelope I sent. 
We have a relative do our Canadian taxes so we really had no idea how to do them.

I still have to file the FBARS.


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## Bevdeforges

You probably should have declared the $70 in interest - but given that it won't make any difference (you'll still owe $0 taxes), it's highly unlikely they'll ever even notice. Filing from abroad, you normally don't need to include any supporting documents. For your salary income, they won't accept anything other than a US W-2 form, which you won't have anyhow. They basically have to trust you on what income you report.
Cheers,
Bev


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