# a Form 2555 quirk



## jimmo-san (Oct 19, 2011)

Form 2555 asks you to list all of the days that you were present in the U.S. If you were in the U.S. on business, then the income that you earned while in the U.S. is considered U.S. income, and therefore not included in your Canadian source income on Form 1116.

For example, if you earn $250 per day and you were in the U.S. on business for two days then you would have earned $500 in “U.S. source income”, even though you are working for a Canadian company. You would then have to claim $500 less salary income on your Form 1116.

You may doubt the veracity of the above, but I learned this the hard way when I was audited by the IRS in July or August 1990. I was called into a basement office in the U.S. Consulate in Toronto and grilled for about 1 ½ to 2 hours by a grandmotherly (in appearance only) IRS agent. She admonished me for not properly declaring my U.S. source income, then freed me from the sauna-like basement office (I’m not exaggerating), back onto the Toronto streets. I’m still haunted by the memory of that experience.

From then on I was diligent in recording all my visits to the U.S. on business and properly recording the amount of “U.S. income” earned. You may feel like disagreeing with the IRS agent’s interpretation, but I decided to never argue with the IRS if I could help it (i.e. if not arguing is not going to cost me money).


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