Preparing a US Tax Return for someone outside of the US - What's involved

Here is a breakdown of what may be involved:  

• The actual U.S. tax return - Form 1040
• Schedule B which reports interest and dividends and also discloses that you have foreign/non-U.S. financial accounts.   Qualified dividends get taxed at a lower rate in the U.S. than say in Canada.  So, if you are taking the foreign tax credit, you cannot take credit for all taxes paid on the dividends, only an amount equivalent to what the U.S. would have taxed you.  Also, you cannot casually decide whether dividends are qualified or not. 

• Schedule D which reports Capital Gains or Losses.  The exact dates are needed due to the foreign exchange.  Long-term gains are also taxed at beneficial rates, so this also needs to be considered in allocating the taxes paid for Foreign Tax Credits.  Again, the benefit is limited to what the U.S. would have taxed you at.  Something to consider when filling out Form 1116 - the Capital Gains are reported in Gross Income, but you have to then deduct the losses.  
• Form 2555, Foreign Earned Income Exclusion
• Form 1116, Foreign Tax Credit. A separate Form for each category - eg. Passive (investment income), General (wages, active earnings).
• Form 8938, Specified Foreign Financial Assets.  There are thresholds here and your FBAR is a good feeder for this form.  Basically, asking the same information as the FBAR but goes to a different US department/address. Your company pension needs to be included here.
• Form 8621, Passive Foreign Investment Corporations (reports earnings in Canadian mutual funds, REIT's, ETF's). 
• Form 8833, Treaty Based Position Disclosure - This form is for various Canada- U.S. Income Tax Treaty elections which may include your Canadian OAS, CPP, and deferring your earnings in your RRSP/RRIF.
• These forms may also be required:
  • Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations (for Americans with an ownership interest in private non-U.S. corporations)
  • Form 3520-A and Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Foreign Gifts (for U.S. owners or beneficiaries of Canadian RESP's, TFSA's)​