Necessary to file 1040NR? 8913
QUESTION:
Hello. The only US income we received for 2006 is interest from our bank accounts and our state refund from our 2005 taxes: 100% non-business income. According to the 1040NR guide, if I understand this correctly, since we are Canadians (living in Canada), the bank interest is “generally” not taxable.
So, is it worth filing a return for so little money? All told we have under 5K.
Reading further in the 1040NR tax guide, I saw that I could get greedy and also claim our mortgage interest, the long distance tax credit and even claim the child credit for our American born daughter, and potentially net us a nice refund check.
Again, is it worth it or could it come back to bite me later? I have until June 15th, right, if I read the guide correctly?
Any advice is greatly appreciated.
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david ingram replies:
To claim any part of the up to $1,000 refundable child tax credit for your daughter, you would have to be reporting earned income of over $11,300. US citizens and green card holders living in Canada 'are' able to get up to $1,000 per child by reporting their Canadian earned income on their 1040 and claiming a foreign tax credit rather than using form 2555 to claim the earned income exemption.
And if you were living in the US from March 2003 to whatever, you could claim back part of the Long Distance Phone tax rebate by filling in form 8913 which makes the calculation in three month increments.
Nothing should come back to bite you but I doubt if it is worth the time in your case.
However, we did a fellow's US return with three kids today and $100,000 of Canadian earnings and his Child Tax Credit for his three 'Canadian born' kids was $1,700. He has not lived in the US for ten years and his kids havce never been there but are US citizens because of their father.
Note, that if we had claimed the 2555 exemption, there would not have been a refund.
And, if his income had been $75,000 or less, he would have received a $3,000 refund from the US.
I do not expect this situation to last long by the way but it is four years old now. �
Hello. The only US income we received for 2006 is interest from our bank accounts and our state refund from our 2005 taxes: 100% non-business income. According to the 1040NR guide, if I understand this correctly, since we are Canadians (living in Canada), the bank interest is “generally” not taxable.
So, is it worth filing a return for so little money? All told we have under 5K.
Reading further in the 1040NR tax guide, I saw that I could get greedy and also claim our mortgage interest, the long distance tax credit and even claim the child credit for our American born daughter, and potentially net us a nice refund check.
Again, is it worth it or could it come back to bite me later? I have until June 15th, right, if I read the guide correctly?
Any advice is greatly appreciated.
----------------------------------------------------------------
david ingram replies:
To claim any part of the up to $1,000 refundable child tax credit for your daughter, you would have to be reporting earned income of over $11,300. US citizens and green card holders living in Canada 'are' able to get up to $1,000 per child by reporting their Canadian earned income on their 1040 and claiming a foreign tax credit rather than using form 2555 to claim the earned income exemption.
And if you were living in the US from March 2003 to whatever, you could claim back part of the Long Distance Phone tax rebate by filling in form 8913 which makes the calculation in three month increments.
Nothing should come back to bite you but I doubt if it is worth the time in your case.
However, we did a fellow's US return with three kids today and $100,000 of Canadian earnings and his Child Tax Credit for his three 'Canadian born' kids was $1,700. He has not lived in the US for ten years and his kids havce never been there but are US citizens because of their father.
Note, that if we had claimed the 2555 exemption, there would not have been a refund.
And, if his income had been $75,000 or less, he would have received a $3,000 refund from the US.
I do not expect this situation to last long by the way but it is four years old now. �
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