US Citizen living in Canada, making US income

[Alister]

I just moved to Canada as a permanent resident but am continuing to work remotely for my US employer. I understand I will be eligible to take the exclusion credit since Canada and America are entered in a tax treaty and I expect to make about $38,000 USD this year. Which level of TurboTax will be able to calculate and deduct credits for this situation, and do I need to file through the TurboTax Canada product as well in order to file my Canadian tax? Will there be a difference in how my income is taxed based on when I moved partway through the year (ie: state and local tax while living in America for the first part of the year) and will TurboTax be able to account for that?

I am hoping to not have to visit a cross-border tax specialist in person if I can do it all here instead. Thank you!

[DoninGA · Accepted solution]

As a US citizen you are required to report your worldwide income on a US federal tax return each tax year.

To be eligible to exclude your foreign earned income on a US tax return you must meet either the Physical Presence Test or the Bona Fide Residence Test. 

Go to this IRS website for the Physical Presence Test - https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-physical-pre...

Go to this IRS website for the Bona Fide Residence Test - https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-bona-fide-re...

Foregn Earned Income and Exclusion is reported on a Form 2555 which is included with your personal tax return Form 1040.  Using the TurboTax online editions you will need the Deluxe edition or higher to complete a Form 2555.  The TurboTax online editions for tax year 2019 will not be available until early December - https://turbotax.intuit.com/personal-taxes/online/

If you choose to use the TurboTax desktop editions for 2019, any of the editions can be used to report foreign income and exclusion.  The TurboTax desktop CD/Download editions for tax year 2019 are currently available - https://turbotax.intuit.com/personal-taxes/online/

For a state tax return in 2019 you will need to file a part year tax return.  Be aware that many states do not allow a state tax return to be e-filed with a foreign address, so mailing the state tax return would be required.  A federal tax return can be e-filed from anywhere in the world with an internet connection and using a foreign address.  Also note that any US tax refund can only be deposited into a US bank located in the US, if you would be eligible for any type of federal or state tax refund.

For your Canadian tax return you can use the TurboTax Canada editions.  TurboTax Canada is on a separate website from the TurboTax US editions.

TurboTax Canada - https://turbotax.intuit.ca/tax-software/index.jsp

Any and all questions concerning a Canadian tax return will have to be directed to TurboTax Canada support on the Canadian website. 

[Alister]

I appreciate your thorough answer, thank you!