Search found 24 matches

by skobes
Tue Sep 22, 2020 5:04 pm
Forum: Canada / United States Tax & Accounting
Topic: QEF dividends
Replies: 4
Views: 180

Re: QEF dividends

Yes that helps, thanks. > effectively, you are still counting that income, but is only when you sell that it affects you Perhaps you didn't mean this, but for maximum clarity: it's not as if the tax on the dividend is deferred until sale. Distributions reduce basis, but the pro rata earnings increas...
by skobes
Sat Sep 05, 2020 1:48 pm
Forum: Canada / United States Tax & Accounting
Topic: QEF dividends
Replies: 4
Views: 180

Re: QEF dividends

Thanks. To be clear: you are saying to leave it off of Schedule B entirely?
by skobes
Wed Aug 19, 2020 2:03 pm
Forum: Canada / United States Tax & Accounting
Topic: QEF dividends
Replies: 4
Views: 180

QEF dividends

Suppose a US person holds shares of a PFIC (such as a Canadian ETF) that is a pedigreed QEF, and some of its ordinary earnings are distributed as dividends during the year. Should those dividends be reported on Schedule B? If so, how do you avoid the redundant inclusion of income between - 8621 Line...
by skobes
Sat Apr 06, 2019 2:36 pm
Forum: Canada / United States Tax & Accounting
Topic: FEIE - increasing my tax burden?
Replies: 9
Views: 921

Re: FEIE - increasing my tax burden?

All of the US tax *on the CA-source income* is reclaimed by US FTC (assuming you pay more CA tax on the same income). The "limit" you refer to is the separation of US tax on CA-source income, from US tax on US-source income. You will still have a higher effective rate than a hypothetical 1040NR that...
by skobes
Fri Apr 05, 2019 5:22 pm
Forum: Canada / United States Tax & Accounting
Topic: FEIE - increasing my tax burden?
Replies: 9
Views: 921

Re: FEIE - increasing my tax burden?

cosurshe: I also found, to some surprise, that FEIE was very disadvantageous, compared to not taking it. The reason is that it is not an "exclusion" in any reasonable sense of the word. Have a look at the Foreign Earned Income Tax Worksheet in the instructions for 1040 line 44. It works as follows: ...
by skobes
Tue Apr 02, 2019 10:23 pm
Forum: Canada / United States Tax & Accounting
Topic: US FTC - credit for CA tax on US-source income?
Replies: 3
Views: 484

Re: US FTC - credit for CA tax on US-source income?

Should have included a third option
(c) CA FTC of $150 (US tax on US source) leaves CA tax (after credits) of $400 - $150 = $250, for US FTC carry forward of $250 - $150 = $100
by skobes
Tue Apr 02, 2019 10:13 pm
Forum: Canada / United States Tax & Accounting
Topic: US FTC - credit for CA tax on US-source income?
Replies: 3
Views: 484

US FTC - credit for CA tax on US-source income?

US citizen in Canada. On Form 1116 Part II "Foreign Taxes Paid or Accrued", can I include the entire CA tax liability, or only that which is in respect of CA source income? Example: - $1000 US source, $1000 CA source income, all general category and taxable to both countries - CA taxes both at 20% =...
by skobes
Sun Mar 10, 2019 9:43 pm
Forum: Canada / United States Tax & Accounting
Topic: Canada FTC - allocation of tax paid
Replies: 12
Views: 1050

Re: Canada FTC - allocation of tax paid

The withholding is correct. Form 8959 is not 0, it computes the tax and withholding separately and adds them to 1040 lines 15 and 16 as I previously explained. The final result (refund / balance due) is the same as if 8959 were not filed, but the line 15 total tax is different.
by skobes
Sun Mar 10, 2019 8:18 pm
Forum: Canada / United States Tax & Accounting
Topic: Canada FTC - allocation of tax paid
Replies: 12
Views: 1050

Re: Canada FTC - allocation of tax paid

That's not what the instructions say.

"You must file Form 8959 if one or more of the following applies to you.
• Your Medicare wages and tips on any single Form W-2 (box 5) are greater than $200,000
• ..."
by skobes
Sun Mar 10, 2019 12:54 pm
Forum: Canada / United States Tax & Accounting
Topic: Canada FTC - allocation of tax paid
Replies: 12
Views: 1050

Re: Canada FTC - allocation of tax paid

8959 is filed even if the withholding is correct. The tax is added to 1040 line 15 total tax and the withholding (usually the same) is included in line 16 along with the regular W2 withholding. There is also 8960 which is the NIIT. This is only on investment income and not wages. I believe both of t...
by skobes
Sun Mar 10, 2019 12:20 pm
Forum: Canada / United States Tax & Accounting
Topic: Canada FTC - allocation of tax paid
Replies: 12
Views: 1050

Re: Canada FTC - allocation of tax paid

The regular US federal tax is assessed on both US and CA source wages, but SS and medicare (base + 8959) are only on US source wages. I'm not sure it makes sense to treat SS/medicare amounts as if they were paid evenly over all wages.
by skobes
Sun Mar 10, 2019 12:08 pm
Forum: Canada / United States Tax & Accounting
Topic: Canada FTC - allocation of tax paid
Replies: 12
Views: 1050

Re: Canada FTC - allocation of tax paid

So would you subtract it out from the W2 medicare withholding and have a separate allocation of only the 1.45% base?
by skobes
Sun Mar 10, 2019 12:03 pm
Forum: Canada / United States Tax & Accounting
Topic: Canada FTC - allocation of tax paid
Replies: 12
Views: 1050

Re: Canada FTC - allocation of tax paid

... plus California :)
by skobes
Sun Mar 10, 2019 12:02 pm
Forum: Canada / United States Tax & Accounting
Topic: Canada FTC - allocation of tax paid
Replies: 12
Views: 1050

Re: Canada FTC - allocation of tax paid

Makes sense. All the US-source earned income is subject to SS/medicare withholding. 8959 is included in 1040 line 15 total tax but my proposal is to account separately for medicare and SS with proportional allocations for each type of tax, thus: Fed tax rate = (QDCG wks line 24) / (AGI minus QDCG wk...