Ontario Energy and Property Tax credit and FTC U.S. citizen

[LFS]

Foreign tax credit for U.S. citizen residing in Ontario, Canada:

I used Line 435 “This is Your Total Payable [Income Tax]â€￾ of my Canadian return to arrive at my FTC for the U.S. return Form 1116. There is also "Provincial or territorial credits" under line 479 of my Canadian return. In my case, these credits are for the Ontario Energy and Property Tax Credit. The issue is whether or not they should be subtracted out for FTC on Form 1116. I don't think I should subtract this because they are a credit in Ontario and are granted even to individuals who have no income tax owing. The tax return is simply used as a vehicle to give people the credit. And for 2011 it will be paid out separately by Ontario. Should I be subtracting this credit from my Canadian tax paid for use for FTC on the U.S. Form 1116?

[nelsona]

These payments are not reducing your tax.

[nelsona]

No more than the GST credit.

Of course, it shouldn't really matter in terms of US tax, which I'm sure you owe nothing.

[nelsona]

The definitive way to determine what ntario thinks is tax, is to use the Ontario foreign tax credit calculation as a basis.

The amount from line 61 is your "provincial or territorial tax otherwise payable.".

So anything that affects this line, affects Ontario tax.