# So lost



## D.Glasby (May 12, 2015)

I'm a us citizen living in canada since 96. I think my biggest problems are these:

1) I don't know how to map information from Canadian T3s and T5s on to the US forms. I have no idea if I am reporting the right numbers in the right places, reporting things twice, or missing things. 

2) I understand that when I exclude earned income, I can't take a tax credit for taxes paid in canada on that income. But earned income and investment income ends up all lumped together on my Canadian form, and I don't know how to determine what percentage of taxes I paid was paid on that investment income only. My canadian taxes are done by a professional. 

3) I really don't know understand how to do capital gains loss carry over. I can't just copy and convert what the canadian accountant does, because I think the rules are different. I'm not sure. 

I just finished my us taxes, but I'm sure they are wrong, and I'm in tears. I know I should take it to a professional but I just can't afford to do that every year especially when I really shouldn't owe anything, just trying to stay out of trouble.


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## BBCWatcher (Dec 28, 2012)

D.Glasby said:


> 1) I don't know how to map information from Canadian T3s and T5s on to the US forms. I have no idea if I am reporting the right numbers in the right places, reporting things twice, or missing things.


Fundamentally, you don't.

Set aside any/all non-U.S. tax statements for at least a moment. The general principle on the U.S. side is that you report your worldwide income on a gross basis. Wages, salaries, tips, etc. go on Line 7 on IRS Form 1040, for example -- on a gross basis, before social insurance contributions.

OK, according to an Internet search Canada's T3 and T5 are statements related to investment income. But they're tax statements, reporting per Canada's tax system. That's not necessarily relevant. Do you have the underlying account statements themselves for the accounts that generated those T3/T5 reports? What do those actual account statements say?



> 2) I understand that when I exclude earned income, I can't take a tax credit for taxes paid in canada on that income. But earned income and investment income ends up all lumped together on my Canadian form, and I don't know how to determine what percentage of taxes I paid was paid on that investment income only.


You're referring to the Foreign Tax Credit now, IRS Form 1116, and how to calculate the foreign income tax. You should refer to IRS Publication 514. On page 12 of that publication (2014 edition), second column, there's an example that illustrates how to allocate foreign income tax between your earned and investment income. Post a follow-up message if that example is unclear, but it should be pretty clear.



> 3) I really don't know understand how to do capital gains loss carry over.


It's pretty simple, conceptually. As a general rule, on the U.S. side you calculate all your capital gains and capital losses and then arrive a single net figure for the year. If that's a net gain, then there's no loss (even if some of your individual investments lost money -- it's the net total that counts). If the net total is a loss, then you can take a maximum of $1,500 ($3,000 if filing jointly) of that loss in that tax year and carryover the rest of the loss to a future tax year. That carryover then gets applied to the gains and losses in that next tax year.

Are you using U.S. tax preparation software, by the way? Such as the free edition of TaxAct or TaxSlayer, as examples? Please do if you aren't. It greatly helps.


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## Bevdeforges (Nov 16, 2007)

Basically, what BBC has said. Tax documents for Canada (or any other country) can't really be "mapped" to the US reporting requirements. You need to start from the basic documents from the accounts themselves.

However - you say you've finished preparing your returns. Send them in. (The deadline is fast approaching and you've got to get that postmark on them.) You can always amend if you find you've made some horrible mistake - but chances are you won't have to.

US taxes are tough because there is no one "right" way to fill in the forms in any given situation. In the US system, there are simply too many "options" and "choices" and "elections" to deal with. If you've come down to the point where you don't owe anything, send in the forms and get a good night's sleep.

You've already done a "good faith" effort and if there is a major problem, the IRS will be in touch, often simply for more information or clarification, but to be honest, that doesn't occur too often unless the "mistake" involves a potential tax liability of major proportions. 

Now, once you've got your forms in the mail so that you meet the deadline for filing with no great difficulty, start researching some of your specific questions using something like IRS Publication 17, which ought to be subtitled "Everything you need to know about US taxes." Don't worry about "mistakes" you may have made for 2014, but rather think about which statements you need to start collecting in order to do things more correctly next year.

You might also consider for next year paying a pro to do your US taxes, then using your copy of the returns as a model for future years. Using the free (or low cost) software available online is another way to learn what you need. Download it now (for 2014) even if you've already sent in the forms and just play around with it to see how things turn out - if you report this or that or if you do it this way or another. These things are much clearer if you're not under time pressure for a result. (And downloading it onto your computer is a way to avoid "losing access" to your files when all the tax deadlines have passed.)
Cheers,
Bev


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## D.Glasby (May 12, 2015)

thanks for the helpful advice.I really do appreciate it. 
I'm sending it in to today. But I only reported the capital gains distribution, not the the gains that resulted from a cost basis adjustment because I don't know how to carry over my losses from previous years or do the worksheet. On the canadian tax form, the accountant took the gain from the realized gains and losses, multiplied it by 50%, according to the Canadian form's instructions, and then canceled it out with a loss of the same amount from previous years. But I don't think I can just do what they did on my US return, or on lines I would do it. In particular I don't know what goes on lines 12, 14, 15 of schedule D. 

I was playing around with a free version Taxact today but putting in my foreign address didn't seem to prompt it to ask me about country of residency and I couldn't get past questions about W2 form boxes and specific kinds of American tax withholdings, like social security, that I obviously don't have. It said "Are you a member of the clergy?" (hahaha) 

I don't want to pay for an expensive software package only to have it do the same thing.


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## Bevdeforges (Nov 16, 2007)

D.Glasby said:


> I was playing around with a free version Taxact today but putting in my foreign address didn't seem to prompt it to ask me about country of residency and I couldn't get past questions about W2 form boxes and specific kinds of American tax withholdings, like social security, that I obviously don't have. It said "Are you a member of the clergy?" (hahaha)


It's a little fiddly using any of the US tax prep packages for foreign income. Basically, you don't have a W-2 and you need to scroll down to the very end of any list of options they give you regarding salary income until you find the form for income from a foreign employer. (It's not real evident - just scroll any menu you get to make very sure you've see all the possible options.)

Anywhere they ask you for a "state" check to see if there is an option for "foreign" or something similar. 
Cheers,
Bev


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