I have read here and elsewhere that CPP, EI and Ontario Health premium tax can all be claimed on 1116 under General Income. However, if all of one's income is wages from Canada, and you filed a T1, would you not just report your total T1 tax bill on 1116?
Seems to me since the CPP and EI credits and ON Health tax are used to calculate the total tax bill, one would be overstating their tax burden by adding these amounts onto what you paid CRA.
Also, related to 1116: Do you have to itemize deductions on Schedule A in order to take deductions for Home Mortgage Interest on 1116? Instructions say to calculate the percentage reduction on Sch A if income is over a certain amount and apply this percentage reduction to all deductions on 1116.
1. Do you use Sch. A merely as a worksheet to calculate this?
2. If it has no effect on my overall tax bill, do I even need to bother with it?
Calculating Canadian Taxes Paid on 1116
Moderator: Mark T Serbinski CA CPA
How Ontatrio calculates their taxes doesn't enter into whether CPP and EI are taxes or not. It simply reduces or adds to the Ontatrio tax potion.
A similar analogy could be drawn by the states (whicxh allow a deduction for fed tax) and the feds (which allow a deduction for state tax). This does not change the fact that the final US tax available for credit is the entire federal tax and the entire state tax.
Not sure what your question is about home mortgage, you don't GET the deduction on 1116, you APPORTION your foreign tax credit by the various deductions you have already used. You are divvying up your total deduction (standard or itemized) by the proportion of your income which is If you didn't use the deduction on Schedule A, it doesn't apply to 1116 either.
You should be using tax software to do all 1116s.
A similar analogy could be drawn by the states (whicxh allow a deduction for fed tax) and the feds (which allow a deduction for state tax). This does not change the fact that the final US tax available for credit is the entire federal tax and the entire state tax.
Not sure what your question is about home mortgage, you don't GET the deduction on 1116, you APPORTION your foreign tax credit by the various deductions you have already used. You are divvying up your total deduction (standard or itemized) by the proportion of your income which is If you didn't use the deduction on Schedule A, it doesn't apply to 1116 either.
You should be using tax software to do all 1116s.
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
Sorry, I am a bit dense. Let me clarify by way of example:
I have gross income of $100,000 working in Canada ($90,000 wages, $10,000 investment income). My T1 tax bill is $20,000.
On 1116 I report my General Income as $90,000 and foreign taxes paid as $18,000 (90% of total tax paid is attributable to wages; .90 x 20,000 = 18,000).
My question is: Do I also add to this $18,000 the amounts I paid for CPP, EI and Ontario health tax? It seems you are saying that I do.
(I do use tax software, but I still need to know what amounts to enter into the program.)
Thanks!
I have gross income of $100,000 working in Canada ($90,000 wages, $10,000 investment income). My T1 tax bill is $20,000.
On 1116 I report my General Income as $90,000 and foreign taxes paid as $18,000 (90% of total tax paid is attributable to wages; .90 x 20,000 = 18,000).
My question is: Do I also add to this $18,000 the amounts I paid for CPP, EI and Ontario health tax? It seems you are saying that I do.
(I do use tax software, but I still need to know what amounts to enter into the program.)
Thanks!
For FTC, you should assign CPP and EI strictly to the tax associated with your wages.
Does what you call "T1 tax bill" include the Ontario Health Premium? If it does, then what are you concerned about? you've included it in the $20,000!
If it isn't, then the Ontario Health Premium, as far as I can see, is NOT based soleley on your wages, but on your income. As such it should be lumped with your fed tax (so 90% of (20,000 plus OHP) assigned to your wages; 10% to your passive investment income).
How you divvy up the Cdn tax was not part of your original question, was it?
Does what you call "T1 tax bill" include the Ontario Health Premium? If it does, then what are you concerned about? you've included it in the $20,000!
If it isn't, then the Ontario Health Premium, as far as I can see, is NOT based soleley on your wages, but on your income. As such it should be lumped with your fed tax (so 90% of (20,000 plus OHP) assigned to your wages; 10% to your passive investment income).
How you divvy up the Cdn tax was not part of your original question, was it?
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
That is why (as Quebecers have done for years) it is better to refer to the taxes calculated in your Cdn return as 'federal' and 'proivincial', since that is what they are.
Your OH premium is nothing more or less than Ontario income tax.
Your OH premium is nothing more or less than Ontario income tax.
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
References to various "special" taxes or premiums as being 'eligible for FTC' probably was made when the Provinces were trying to mask these as earmarked contributions to a specific cause (to make them look better and the taxpayer, perhaps, feel better).
The point is that Proivincial Health "premiums" or "poverty tax" or anything else tha tthe provs come up with that is determined based on income is covered by the treaty (and IRS rules) as amn INCOME TAX.
CPP and EI are covered in the treaty exclusively.
The point is that Proivincial Health "premiums" or "poverty tax" or anything else tha tthe provs come up with that is determined based on income is covered by the treaty (and IRS rules) as amn INCOME TAX.
CPP and EI are covered in the treaty exclusively.
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
You are right about OHP. I just checked my T1 and it is included in Ontario income tax. So no issue there.
So, regarding EI and CPP, I infer from the first line of your answer ("For FTC, you should assign CPP and EI strictly to the tax associated with your wages") that one does in fact add these amounts on top of the relevant portion of income tax paid. So, in my example, taxes paid to be reported on 1116 for general income are:
$18,000 (.90 x $20,000 total income taxes on T1)
+ 100% of CPP paid
+ 100% of EI paid
Right?
Thanks!
So, regarding EI and CPP, I infer from the first line of your answer ("For FTC, you should assign CPP and EI strictly to the tax associated with your wages") that one does in fact add these amounts on top of the relevant portion of income tax paid. So, in my example, taxes paid to be reported on 1116 for general income are:
$18,000 (.90 x $20,000 total income taxes on T1)
+ 100% of CPP paid
+ 100% of EI paid
Right?
Thanks!