# TAXES - US/Canada



## uncertainperson (Apr 9, 2015)

I am an American citizen studying in Canada. During 2014 I only worked in Canada and therefore only have T4 forms. The U.S requires its citizens to file taxes regardless of current residence. When filing tax forms for the US they, of course, ask for information that is taxed in the US (Social security wages, medicare wages, etc.) Canada, obviously taxes for different things (CPP-QPP pension, EI premiums, Union Dues, etc.)

My question:

How do I file US tax forms with Canadian information?
It is of course not as simple as translating, or guessing what information goes into which line.


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## Bevdeforges (Nov 16, 2007)

Easy - you just file the US forms, filling in your information from your Canadian forms, however do NOT under any circumstances send them the forms from Canada. (They won't have any idea what to do with them.)

It actually is as simple as translating and "guessing" (or reasoning) what information goes into which line. (See Publication 54 for much more information on this.) Just remember that US income taxes start with your gross income (i.e. before any and all deductions for pensions, union dues, social security or whatever else Canada takes). Publication 54 (2014), Tax Guide for U.S. Citizens and Resident Aliens Abroad
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

uncertainperson said:


> The U.S requires its citizens to file taxes regardless of current residence.


No, the U.S. only requires its citizens who meet the applicable income thresholds to file U.S. tax returns. IRS Publication 501 provides all the filing thresholds. See Tables 1, 2, and 3 in that publication.

FinCEN Form 114 and IRS Form 3520 (or 3520-A) are not tax filings. Either or both of those forms may be required even if you're not required to file a U.S. tax return. (Same with U.S. Selective Service registration. That's not a tax filing, but it may apply.)

Finally, if you genuinely, legally owe zero U.S. tax (or are entitled to a refund, such as a refundable tax credit) then the penalty for failure to file is zero (or, if applicable, loss of the refund if you wait too long). Yes, you can be obliged to file but face zero penalty (or simply lose your available refund) if you don't. About 94% of Americans living overseas fit this zero penalty profile, according to the best data I can find.


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## maz57 (Apr 17, 2012)

To add to what Bev and BBC have already said, the IRS pretty much takes your word for it as to what foreign income you report. Canadian information slips are meaningless to the IRS system; don't send them. If the IRS has a question they will get in touch; it is a virtual certainty they won't.

Don't forget all amounts must first be converted to US dollars before you enter them on your US return. Any of several published average exchange rates are acceptable as long as you are consistent. (See Pub. 54) Presently this will work to your advantage because the conversion will lower your income in US dollar terms.

Keep in mind that a number of Canadian government tax-advantaged accounts can greatly complicate your US filings. Steer clear of these, particularly if you are only temporarily in Canada and plan to return to the US. The Foreign Earned Income Exclusion is the easiest way to reduce your US taxable income to the point you owe no tax, but the Foreign Tax Credit can work as well. The FEIE only applies to earned income, not investment income. The FTC only applies to Canadian income taxes paid, not other types of taxes. You may have to run some trial scenarios to see which works best.


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## uncertainperson (Apr 9, 2015)

*Employer Identification Number*

Thank you so much for your help. I am incredibly appreciative. 

I have another question for you. I filed my tax return and received a message from the IRS saying that I had an incorrect Employee Identification number. Canada uses a different number formatting. I need to enter my Employer Identification Number in order to complete my taxes. However the IRS does not accept the only one I have, because it is Canadian. Where do I go from here?

I am using Taxact to file my taxes.

IRS Message:

"Rule Number: FW2-502
Rule Number Description: The Employer Identification Number (EIN) entered on Form W-2, Copy 1 , does not match the IRS e-file database."


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## maz57 (Apr 17, 2012)

As a US citizen there is only one number you should ever use for any reporting to the IRS....your Social Security Number. If all your 2014 income was Canadian source, where did this W-2 come from? Was it generated by TaxACT? If so, delete it and just report the income on the appropriate line on your 1040.

Don't send any Canadian government info or employer numbers to the IRS; it is totally unintelligible to the US system and as you can see it will only screw things up. No Canadian employer will have a US EIN because they are Canadian, not US. Canadian employers don't do W-2s and you shouldn't either.


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## Bevdeforges (Nov 16, 2007)

Exactly what Maz57 said. And further, you should not enter non-US salary on a W-2 form. There is a separate form for reporting foreign salary - called an FEC. On the Tax Act software, you have to scroll down on the drop down menu where you have the W-2 option - it's at the very end (or was last year) of the choices.

However, since you've already filed, you should reply to the IRS that your employer is Canadian and does not have an EIN. That you mistakenly entered your salary on a W-2 instead of an FEC. That should give them the explanation they need.
Cheers,
Bev


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## MarylandNed (May 11, 2010)

You might be able to claim Canada as your "tax home" and therefore qualify for the Foreign Earned Income Exclusion (FEIE). This means that you are not liable to pay any US tax on that foreign income up to a certain amount ($99,200 for 2014).

My daughter is also a student and also earned some money in Canada in 2014. When I first did her taxes earlier this month, I simply added her Canadian income and foreign tax paid to her US tax return (don't forget to report the foreign tax paid as this will reduce your US tax). As others said, do NOT report Canadian income on a W2 because you did not get a W2 from Canada - you likely got a T4 which is a Canadian income form. My daughter owed a small amount to the IRS when I used this method of reporting.

However, when I looked at my daughter's taxes again before filing, I realized that she actually qualifies for the FEIE because she lived for most of the year in Canada and maintained her primary residence there for the entire year (she went to school in the spring but worked an internship for the rest of the year). There are 2 ways to qualify for the FEIE (Physical Presence Test and Bone Fide Resident test). My daughter did not qualify under the Physical Presence Test (she spent more than 30 days outside Canada) but she did qualify under the Bone Fide Resident test. Using this method of reporting, my daughter owed $0 to the IRS but you do have to file a US tax return if you use this method regardless of income level.

More info here: 

Foreign Earned Income Exclusion


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