entering T4 into 1040

[regina]

nelsona

several questions to fill up for my husband case (he departed Canada end of March):

1040 form:
1) the canadian income should be gross income/taxable income, or income after Canadian tax (paied with each pay stub)?
2) Shall we put the canadian income into W4 wage space (box 1), and paied canadian tax into Box2? or put those information into Box18-20, (Local Wage or tax withhold)?
3) Do we need to mention anything related, such as CPP Pension adjustment?

2555 form
4) When we filled the 2555, it seems the figure (19k) of maximum allowed 85k times my days in Canada, lesser than the Canadian income before his departture. What we do about that difference? Can we use the adjust on Box 45, to get 19k up to my husband's canadian income?
5) We believe we are bona fida resident of Canada, shall we put US income (1040) into here, since it asking whether you present in US and have US income in tax year? BOX 14.
6) foreign income here is after tax or gross?

Thanks as always
Regina

[nelsona]

When reporting your Cdn income, don't try to fake a w-2. Simply override the values on the 1040, in teh appropriate lines. Wages is gross of course. none of the taxes are to be reported as fed or local tax, they are foreign taxes.

The 2555 maximum is calculated by 85K times the fraction of days the worker was in Canada before the move. Remember it only applies to Cdn WAGES, not other income. The taxes on any wages above this limit can be used on form 1116 just like any other Cdn income.

[regina]

Thanks, nelsona,

Now it seems we kind of figure out the 1116 is the better than 2555 for our case.
So for Fed return, we can do foreign tax credit (including CPP/EI) and property tax/mortage interest tax deductions for canadian property (we sold before we depart). Hopefully nothing wrong there?

But For state (CA) return, CA doesnot have treaty, so it will take the Canadian income into account without any exclusions, it ends up I am owing the state tax.

But from the tubo tax summary, there's a statement said that we must do 1040 form bacause we have excessive moving expense reimburse.

Does that make sense to you, at all? Or in this case we'd better to do 1040NR?

Thanks
Regina

[regina]

seems not yet. 1116 is confusing.

Why I put 9.8k paied foreign tax there, but the utilized shown up only 4.2k, the rest are carry over. It seems a ratio somewhere to do this. What comes up that ratio? My foreign income put there is 30k. Is there a way to fully utilized that foreign tax paid as full credit?

Thanks

[nelsona]

1116 has always severely limited foreign tax credit, now you know.

As to your cali ta, most states have part-year tax returns. You are not liable for cali tax on income earned before moving to california, including Cdn income.

And yes you may get into AMT if you have too many deductions.

And don;t forgrt that internal RRSP income is also taxable in Cal, even if you don't take it out.

You have moved to the worst tax state for Cdns.