Hey, everyone. Hope you're all doing well.

I am so overwhelmed by filing taxes this year. I've been doing them online via TurboTax every year without any issues, but I can't seem to be able to do that this year because of my husband's foreign income. He worked from January 1st, 2007, to August 24th, 2007 in Canada, earned a gross income of $15,674.21, then moved to the USA on August 31st, 2007. He received no EI, had no RRSPs, and did not work in the USA. We have no children/dependents.

This is what I have figured out so far (please correct me if I'm wrong):

- His income goes on line 7.
- We can enclose a letter declaring Réjean a resident for tax filing purposes even though he did not have his green card in 2007.

These are the questions I have:

- It's Form 2555 that we file to make sure Réjean's Canadian income is not double-taxed, right? How about the 2555-EZ? What about Form 1116?

- Do I send in Réjean's T4 and the "Revenus d'emploi et revenus divers" thing from Revenu Québec in with the return?

- I read that I have to convert Réjean's foreign income into US dollars before putting it on the tax return. Is it done with today's exchange rate or the exchange rate as of August 24th, 2007, or December 31st, 2007?

- Does any of the TurboTax (or TaxAct, etc.) software allow us to fill out the tax forms electronically, including the form used to get the tax credit, so I don't have to do it via pencil and paper? I know I can't file electronically because of needing to send in the statement declaring Réjean a resident for tax purposes with the return, but just having the computer fill out the form for me like I'm used to will help take some of the stress off. I want to do the return myself if at all possible... I don't know if I trust H&R Block, but if I have to have them do it, I'll let them.

Thanks for your help. I'm sorry if this is repetitous; I have read a ton of other threads on here ("Filing 2007 taxes in the US", "Filing 2006 Canadian Income Taxes", "Taxes, Help!!!", "Tax Information", plus IRS's Publication 519), but it's not making things any clearer for me.

your case seems really similar to ours. I've never bothered with a letter-my hubby had a SSN from prior J1 visas-I just filed jointly, included both our income on line 7, then excluded all of the Canadian income using the 2555EZ. The 2555EZ has a little work sheet where you figure the portion of $80,000 that you can exclude based on how much you lived in the foreign country.

It probably wouldn't hurt to include a copy of the T4, but I haven't and have never been called on it.

I haven't used a tax software since getting married so can't help on that one. Also, just by excluding the hubby's income we've gotten all of the tax withheld back so I've never bothered with the 1116

Did you have to convert it to US dollars first?

Yup - all amounts should be reported in USD. I used the Department of Commerce rate for dec. 31st; which was 0.9990

I sent in (just today)

1040 married filing jointly
2555 foreign income exclusion (or whatever the name).
I did attach my T4s, just in case.

Thank you so much!!!

0.9990... wow... that pretty much evens it out, doesn't it?

Thank goodness this is the only year I have to do this...

Tell me about it sister. This is a crazy year. Oh, and remember to send your return to Texas.
You'll do fine

Len
what did you decide about the foreign tax credit? are you taking it in Canada or the US or didn't take it either? I still haven't filed our US taxes yet-and naturally the hubby won't even think about filing our Canadian taxes for another month. of course since I haven't filed yet, I can't really start nagging him

My tax man said to file only 1040 and 2555 (exclusion of foreign income). No 1116 (the credit).
I don't think I'll even mention it in the Canadian return... still looking around for my stupid transit passes so I can claim the public transit amount

.9990 ?????????????????

NOOOOOOOOOO!!!!!!!!!!!

Canadian Bucks for 2007 convert at 0.93565

Thats the average rate. You do not use the 12/31 rate Jeez

Not that it matters much since you exclude all the tax and it washes out. But if you are like my wife who still gets paid in Canadian dollars and reports it all to the IRS.. well, its a big difference.

And no, don't send in his T4.

Okay .. I'm angry and confused .. taxes aren't supposed to be so brutal!!!!!

I moved at the end of July 2007 ... I was planning on filing using all my income on my Canadian return and therefore taking full tax credits as 90% of my world income was derived from Canadian Sources and then my husband and I were going to file married filing jointly with me as a resident ... Publication advises that if you are going to file married filing jointly you must include and are taxed on your world income otherwise you must file married filing separately ... does anyone else here know this???

Nonresident Spouse Treated as a Resident
If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U.S. resident. This includes situations in which one spouse is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other spouse is a nonresident alien at the end of the year.

If you make this choice, you and your spouse are treated for income tax purposes as residents for your entire tax year. Neither you nor your spouse can claim under any tax treaty not to be a U.S. resident. You are both taxed on worldwide income. You must file a joint income tax return for the year you make the choice, but you and your spouse can file joint or separate returns in later years.


Resident Aliens
Resident aliens are generally taxed in the same way as U.S. citizens. This means that their worldwide income is subject to U.S. tax and must be reported on their U.S. tax return. Income of resident aliens is subject to the graduated tax rates that apply to U.S. citizens. Resident aliens use the Tax Table or Tax Computation Worksheets located in the Form 1040 instructions, which apply to U.S. citizens.


And to top it all off my husband made me take our taxes to a tax professional whom we are paying THAT I'M TEACHING TO DO MY TAXES!!! cause she has never dealt with this before ... omg .. I'm gonna have a breakdown

Out of curiosity, how did you come up with 0.93565? When I go to the Federal Reserve site with the average rate of exchange for 2007, it shows 1.0734 for Canada.

My .9990 I took from the Department of Commerce, and took indeed the last day of the year.

I'll just use that, then. It doesn't matter for us, anyway, since he only made the $15,674.21 CDN... no matter which rate we used, it'll be under the $56,562 that we're allowed in exclusions. And it looks like he was in Canada for 241 days, not 243, since he came back to Canada from here later in the day on 1/1/07 and came here early in the day on 8/31/07. TOO MANY STUPID LITTLE DETAILS!!!! UGH!!!! FGHKLDFJJGLDFJGLKDFJGFKLDJGFLDKGJDFLKGJDLGKJFGLJKLKJ

Ok, is this correct?

$15,674.21 CDN = $16,824.70 USD if the exchange rate is $1.0734 USD for every $1 CDN?

Yup, it's correct. And the exclusion allows up to 80K or the like sweetie, so you're cool.

Thanks.

This is brutal. I'm trying to figure out Line 44 (tax) on my 1040, and it feels like I've hit another brick wall. I'm about ready to give up and take this in to H&R Block. There has GOT to be some tax software out there that can do this for me even though I won't be e-filing this!

We have Turbo tax Deluxe 2007 and it includes form 2555, so one should be able to use it!!

As wel this site has OODLES of info on form 2555 : http://forums.serbinski.com/index.php?sid=...9e0066bcbee3f79 Its free to register and ensure you do a search!! as a grumpy guy named nelson answers most of the questions,lol

I should just go buy that, then. As long as it'll let me print out the forms so I can mail them in, then this will save a few more of my hairs from going grey. I've been trying to do this manually by following the 2555 and 1040 instructions, and no wonder people b!tch about taxes! I always used to think it was fun doing it with TurboTax but didn't think it was an option this year.

Thanks!

ya, u can print them off. One can also download the software from their internet site. But I prefer to buy the disk. bestbuy usually has good prices. Cheapest i found was at Costco, but that was like a month ago

Is it possible to e-file state taxes but mail in federal?

Now I'm trying to work on Kansas state taxes, and it's a whole 'nother mess... it doesn't say anything about being able to exclude Réjean's foreign income...

I know on Turbo tax one could efile 1, and mail in the other!!! I mailed them both in!! Turbo tax charges like $18 a return!! mailed both returns in late march and had the refund within 2 weeks (electronic banking)

THEY'RE DONE. ALL DONE. FINALLY. All that's left to do is make photocopies for my records and mail the originals.

I am so seriously tempted to throw a party in celebration. I am THAT happy about it. These taxes were more brutal than the I-129F packet was.

TEE HEE!!! Ain't it grand sister, to be done with double taxation???????????????????

I am such an idiot.

I forgot to convert my husband's Canadian income into American dollars...no matter how many times I read to do so. Please tell me that I wouldn't have saved all that much.

I just cut a check for $517 dollars on Monday to the IRS. GRRRR!

It doesn't matter to the IRS though right, if anything they got more money then they should have.

It is WONDERFUL. I am SO GLAD we do not have to do this again.

Eeeek. It depends on how much his income was. For example, like I posted earlier, my husband's income was $15,674.21 CDN, which translated out to $16,824.70 USD using the exchange rate of $1.0734 USD for every $1 CDN that was found here.

I wouldn't think it would matter, though. As long as he made a fair amount under $85,700, it shouldn't matter. The way I see it, even with the exchange rate, it would still all be excluded.

congrats!!
Just curious on ur exchange rate!! Looking at various website, bank of Canada being one and x-rates (which was a link from the irs.gov site) the exchange rate on dec 31 2007 was 1.01204 USD Probably doesnt really matter.

Thanks!

I got mine from the Federal Reserve website. It was the average exchange rate for the year rather than the one on 12/31.

http://www.federalreserve.gov/releases/g5a/current

I don't think it really matters. Réjean's income was so far away from the $85,700 that no matter what exchange rate was used, he'd still have it all excluded.

I ended up taking mine to H&R Block .. I called all of the premium offices to see if anyone was familiar .. and low and behold ... I found someone thank goodness!!!

and form 2555EZ seems less complex than 2555.

I think that's actually backwards. You would divide 15K by 1.0734 and get 13K of income in USD.

Look at the exchange in past years. 1.13 in 2006, 1.21 in 2005, 1.30 in 2004. If you made $20,000 cdn in 2004, you made $15,384 USD.

I remember how expensive it was to buy stuff from the USA back in 2004 when I was paying with Canadian dollars. Everything cost me 30% more than the price of the good was advertised as.