Author Topic: Canadian income, U.S. 1099-Misc royalties, Illinois State, U.S. Federal  (Read 208 times)

CameronB

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I have a specific situation in which I'd like to figure out which forms I need.

I live in New Brunswick Canada.
I have a basic T4 income that's under the double taxation threshold. I don't have over $10,000 in any non-American bank accounts. I own no property or car in Canada. Nothing special.
I have a 1099-Misc that is from royalty checks coming from a company in California. My residence when these checks started coming in was in Illinois though I haven't
lived there for almost 4 years and have only spent a month there to visit. The checks are sent to a friend's house and then to me in Canada. The total for the year is under $1000 USD.

I've filed my Canadian taxes as it was straightforward, but I've put off my U.S. federal and state taxes, because I'm not sure what I need. A Canadian H&R Block specialist told me I don't even have to claim any Canadian income on my U.S. federal taxes (if it's under the double taxation threshold) and she couldn't answer any questions about the 1099-Misc or whether or not I need to do Illinois state taxes. (Also, their offices in Fredericton, NB were flooded by the St. John river. Communication wasn't consistent.)

I'm married to a Canadian and filing separately which halts the process of completing my U.S. taxes through TurboTax (I can't provide her SSN so I'm not allowed to move on) plus I don't know where the 1099-Misc or Canadian income is claimed or if I even need to do Illinois taxes since I have no ties there. No property, bank account or job.

I will gladly provide any additional information, so I can get pointed in the right direction.

Phil Hogan, CPA, CA, CPA (Colorado)

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Hi Cameron

Let me do my best to help:

The HR agent was incorrect in their assessment. As a US citizen you'll need to file US tax returns regardless of whether you need to actual pay US taxes.

In most cases you won't owe US tax, however the 1099 income may attract US tax depending on your other sources of income. If this is the case you'll get credit for this US tax on your Canadian tax returns. It will depend on what type of royalties you receive. Oil and mineral royalties will be taxed in the US and California and artistic royalties will only be taxed in Canada.

Also note that the $10,000 FBAR threshold relates to the aggregate highest balance in all accounts. Therefore you could be over if the highest balance in all your accounts combined exceeded $10,000 in any year.

You may need to take advantage of the streamline tax filing procedures to get caught up on the US side.

Hope that helps and let me know if you have any other questions.

Cheers

Phil

Phil Hogan, CPA, CA, CPA (Colorado)
250-381-2400
Hutcheson.ca
phil@hutcheson.ca
* The information contained in these posts should not be construed as professional advice and is for informational purposes only.