State tax on 1040NR

stannd · Post by **stannd** » Tue Jul 19, 2016 11:57 am

Iâ€™m confused about what amount of state tax to claim on Schedule A of my 1040NR. Do I claim the amount withheld on my W2 or the actual final amount I end up paying on my state return?

I had a refund on my California return. Do I subtract this amount from the amount withheld on my W2, use the higher amount from my W2 slip, or do I have the choice?

In addition to the FICA, what amount do I claim in Canada? The W2 amount or the lower actual final amount paid?

I think I can also claim the amount that says SDI paid to California from my W2 on my 1040NR, can this amount also be claimed in Canada just like FICA?

nelsona · Post by **nelsona** » Tue Jul 19, 2016 12:09 pm

Assuming you are not using software to fill 1040NR, you will find reading the instructions for 1040NR very useful in answering most questions.
For example the VERY FIRST LINE of the instruction for 1040NR, Schedule A says:
Line 1
You can deduct state and local
income taxes you paid or that were
withheld from your salary during 2015
on income connected with a U.S.
trade or business. If, during 2015, you
received any refunds of, or credits for,
income tax paid in earlier years, do
not subtract them from the amount
you deduct here. Instead, see the
instructions for Form 1040NR, line 11,
earlier.

Your Cali refund you just received will thus go on your 2016 return, next year.

The taxes eligible for use on your Cdn return are the IRS and state/local income taxes that you CALCULATED for the year (from your returns, not your W-2) as well as the FICA that was withheld for the year (shown on your W-2).

stannd · Post by **stannd** » Tue Jul 19, 2016 2:21 pm

Thanks.

I did read the instructions, but I wasn't quite sure if I was understanding them correctly. Here's the thing, I don't think I will have an obligation to file a 1040NR return in 2016; I didn't work in the US this year, only 2015. So what happens with the refund amount? Do I still have to file a 1040NR return to report this as income on line 11, or did this just happen to work out to my advantage because of my unique situation?

What if the roles were reversed and I owed more state tax? Could I have added this amount on Schedule A in 2015, or would I still just use the amount from my W2?

nelsona · Post by **nelsona** » Tue Jul 19, 2016 3:12 pm

If your US income, including the refund (which is considered income; you will be issued a tax slip for it), is less than the filing threshold for 1040Nr in 2016, then you won't have to file.

If you owed more California tax? The instructions read:

You can deduct state and local
income taxes you paid or that were
withheld from your salary during 2015...

You wouldn't have paid the extra tax in 2015, so it wouldn't go in your 2015 1040NR. If you had worked in 2014 and had a balance owing on your 2014 cali return, you would add this to the taxes you PAID for 2015, since that is when you paid it.

stannd · Post by **stannd** » Tue Jul 19, 2016 3:46 pm

Thank you for taking the time to help me with this, I understand it now.

Just to confirm, California SDI (State Disability) from W2 would be considered FICA eligible for 1040NR Schedule A and Canadian return, correct?

nelsona · Post by **nelsona** » Tue Jul 19, 2016 4:30 pm

SDI is not FICA.
it is however considered by IRS as a state "tax", and thus deductible on schedule A.

The treaty also allows this tax to be used on your Cdn return along with IRS income ta, FICA and other state taxes.

stannd · Post by **stannd** » Tue Jul 19, 2016 5:02 pm

Ok.

Thanks so much for all your help.