QUESTION:
I moved to Hawaii in November 2004, worked for a week in December and filed
my 2004 state and federal taxes in Hawaii, reporting just this income. I've
since learned that I am actually required to report my worldwide income (my
Canadian income) as well. Since I only filed a 1040, which other forms must
I file to ammend my 2004 return?
=====================================================
The form to amend a 1040 or a 1040NR is the 1040X form.
And , there are likely three possibilities.
1. You are a US citizen or green (resident alien) card holder. If this is
the case, your 1040 must include your world income including wages, rents,
bonuses, scholarships, interest, dividends, royalties, alimony, employment
insurance, self employed business farming or fishing income and any
gambling, lottery or jackpot winnings.
If this is the case, and you have already reported these amounts to Canada,
you would claim a foreign tax credit on form 1116 for everything. However,
in the case of wages or self employment, you may chose to exempt them using
form 2555 which exempts foreign earnings up to $80,000 pro-rated by the
number of days you were in Canada and providing you fall into one of two
categories. The categories are physical presence which means that you have
been out of the USA for 330 out of 365 days or bone fide residence which
means that you have lived in another country for an entire calendar year.
2. You have just gone to Hawaii under an L1, H1 or TN visa. Judging from
your email address, I suspect an H1 or TN visa.
IN this case, you had three choices.
A File a 1040 as you did and only report the US income but check off the
dual status box (38b) at the top of page two of the 1040. this means that
you do NOT get the standard deduction but have to itemize. Also put "DUAL
STATUS RETURN" across the top of page one of the return. THEN you have to
file a 1040NR to report any US income you may have had while you were not a
resident of the US. This is usually just a bunch of zeros. Put "DUAL
STATUS STATEMENT" across the front of the 1040NR.
B. Just file a 1040NR reporting the US earnings. If it is under $10,000
(likely) you could even claim the Article XV Canada / US Tax Convention
(treaty) exemption of earnings under $10,000. You would do this on page 5
of the 1040NR.
However, if you did that, you would have to add it on top of Your Canadian
income on your Canadian return and pay a higher tax rate. Better to
calculate the tax which will be "identical" to the 1040 Dual Status return
above.
C You could do as you imply in your question and report the world income as
in "1" above claiming full exemptions and deductions and foreign tax credits
or exemptions. In this case, your tax would be the same as in 1 above.
In either case, your Canadian return should have pro-rated exemptions which
means that you put the date of departure on the front of the Canadian Return
and prorate your exemption amount of schedules 1 and 428 of the Canadian
return.
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