My company where I use to work in Canada, made some wrong calculations while calculating my departing pay in 2007. They are interested in paying me the same in 2008. (after legal altercations)
I realize this would be confusing, but if they are paying me in 2008 would cost me extra to do my 2008 taxes in US in early 2009 as I have to show my Canadian income here. Or are there any other ways they can pay me so that I won't have to file Canadian taxes anywhere for this pay??
I won't be having any other income in Canada for 2008!!
Income from 2007
Moderator: Mark T Serbinski CA CPA
Nope, anything they pay you will be on account of employment, and will be reported on a T4 slip.
If the payment is for less than CDN $10,000, you can use the Treaty to exempt it from Canadian income tax, though you will still have to file a Canadian tax return to do that.
And of course, it will be fully taxable on your 1040 and State returns.
If the payment is for less than CDN $10,000, you can use the Treaty to exempt it from Canadian income tax, though you will still have to file a Canadian tax return to do that.
And of course, it will be fully taxable on your 1040 and State returns.
While you *could* get this income back-fitted to 2007 (but probably not), it is to your advantage, and simpler, to merely consider it 2008 income.
If it is less than $10,000, it will not be taxable in canada (by treaty) and you would merely file a non-resident return and exclude the income. no Cdn income tax.
For US merely add it to your income, like a second job. Nothing else to do, since no tax owed. The only hiccup is that you might pay state tax, but I'm sure that the fed/state tax will be less than the Cdn/prov tax that you would have paid last year.
If there is some cpp/EI withheld, you can use this on form 1116 as credit. But be aware that yourCPP may be reimbursed to you when you file your CDn taxes, so you might want to file Cdn early and find out before you use CPP/EI on your uS return.
Legal costs incurred in 2008 can be used as a deduction on both returns if needed. 2007 would have to be claimed on 2007, I believe.
As I said, you are better off leaving this in 2008.
If it is less than $10,000, it will not be taxable in canada (by treaty) and you would merely file a non-resident return and exclude the income. no Cdn income tax.
For US merely add it to your income, like a second job. Nothing else to do, since no tax owed. The only hiccup is that you might pay state tax, but I'm sure that the fed/state tax will be less than the Cdn/prov tax that you would have paid last year.
If there is some cpp/EI withheld, you can use this on form 1116 as credit. But be aware that yourCPP may be reimbursed to you when you file your CDn taxes, so you might want to file Cdn early and find out before you use CPP/EI on your uS return.
Legal costs incurred in 2008 can be used as a deduction on both returns if needed. 2007 would have to be claimed on 2007, I believe.
As I said, you are better off leaving this in 2008.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
"Nothing else to do, since no tax owed"
I meant of course, no foreign tax owed, so no complex form 1116. Your 1116 will be simple, including only EI and maybe CPP, as I described.
I meant of course, no foreign tax owed, so no complex form 1116. Your 1116 will be simple, including only EI and maybe CPP, as I described.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
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dhirenasha
- Posts: 57
- Joined: Fri Nov 23, 2007 9:31 am
- Location: USA
Because of all the extra paper work 1116 or 2555 and Canadian taxes, I think It would be more advisable to ask them to pay for taxes as this would be a consequence of getting paid for 2008.
Its like the more you don't wanna do taxes in both the countries as I was planning to do in 2008, the more you get engulfed in it!!!
Its like the more you don't wanna do taxes in both the countries as I was planning to do in 2008, the more you get engulfed in it!!!
Is it more than $10K? If not, then there are no Cdn taxes. The Cdn return will take 15 minutes, tops.
And you couldn't use 2555 with your 1040 anyways, since you live in US.
It's clear that you have a problem with these folks, and you can ask of them whatever you wish.
I'm only telling how the income should be reported, and how it wil be taxed. Who pays the accountant, if any, is up to you to negociate.
And you couldn't use 2555 with your 1040 anyways, since you live in US.
It's clear that you have a problem with these folks, and you can ask of them whatever you wish.
I'm only telling how the income should be reported, and how it wil be taxed. Who pays the accountant, if any, is up to you to negociate.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best