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.
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David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
 
Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.
 
This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.
 
$800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,000 would be the same with one rental
 
$1,200 would be the same with one business no rental
 
$1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,600 would be for two people with income from two countries

$2,800 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.
 
With a Rental for $350
 
A Business for $350 - Rental and business likely $450
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.
 
Just a guideline not etched in stone. 
 
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