Canadian non-resident return - World net income question

[puzon23]

Hi All,

I'm going to file a Canadian non-resident return this year as I still have some employment income from last year and I got a T4 from my old company.

Anyway, in the instructions I've read that they need you to include your world net income so you can calculate any tax credits you might be entitled to. Here is where I have a problem.

How am I supposed to calculate my net world income? In the US I will be filing a joint 1040 return with my wife so the net income will not be just mine but ours.

Am I supposed to take the percentage portion that belongs to me and then derive that income based on the percentage? However, that logic seems flawed. If I were to file a return as single in the US then the net income for me alone would be different as the overall numbers would be different. Different exemptions, credits, etc. You get the picture.

So again, does anyone know how I am supposed to get my world net income if my Canadian return is individual and my US one is joint and the calculations are different depending on circumstances?

Or, would I have to do a "fake" 1040 return just for myself on paper (not to file) just to see what my net income would be in US if I were living alone and filing a single 1040 and then use that number? Is there any guidance on this?

Hope someone can shed some light on this?

Thanks!

[nelsona]

You know which income is hers and which is yours. If you were filing a state return, they may even ask you split out the income.
It is the Income they want to know, not what you later determine to be your taxable income. It's not the return. Net mean after expenses, not dedeuctions and credits.

You know wHat each of you made at your jobs and investments. You list yours.

[nelsona]

And remember if the salary was less than 10k, you exempt it on your cdn return.

[puzon23]

Hi Nelsona,

Thanks for your reply. So it sounds like it is a little misleading when they mention Net world income or at least I misunderstood it to be taxable income (after credits, exemptions, etc). So basically I will give them my gross income which is a combination of all W-2 and 1099s. I don't have any expense associated with that income so that should be it. Unless, again I'm misunderstanding what the expense is to calculate the net.

Now, going back to your 10k exemption you mentioned. Are you referring to the personal exemption or the treaty one? I barely made just a little over 10k by like 2-3 hundred. However, the amount of withholding they took on this income was pretty much 50% so I really want to do a return to get a lot of that back. If I recall correctly, as non-resident I'm not entitled to personal exemption anymore but with this amount of income the tax is still within 15% bracket which is definitely not 50%. Also, I don't think that as non-resident I have to pay CPP which was also taken out.

Any thoughts here?

Thanks!

[calvin 1]

My wife bought a property in Texas in 2005 with funds from both of us. We sold it last year with a capital gain. The property is titled in her name only. However Texas is a community state and we understand IRS will consider it jointly owned by us. 50% of capital gain will be attributable to me and 50% to her.. However we have always been Canadian residents, and US non-resident aliens all these years including when the property was purchased. As we have never been domiciled in Texas, does community state still apply to us? Do I have to file 1040NR to report 50% capital gain besides her?
Thank you.

[nelsona]

Puzon
Unfortunately you are just over the treaty limit on your T4 so you will have to any cdn tax
You will get some of the withholding back and can use that on your 1116 in US

You are liable for cpp because it was employeerlated it too is creditable on 1116.

You will file a return for the province where you worked, so will have some prove tax too.

[puzon23]

Hi Nelsona,

Thanks for the answer. Well, I figured I would have to pay some tax on it, that's fine. However, I know I will not have to pay the 50% they withheld but rather pay the regular 15% which is the rate on that kind of income.

BTW, was I correct that I cannot claim personal exemption on my Canadian return? That's for residents only, correct?

I believe TurboTax should be able to handle a non-resident return, at least that's my understanding.

Thanks again for your help!

[nelsona]

You will figure the tax on a provincial return but as a non-resident
The tax will not be 15%, it will be higher.
You will not get all the personal amount because you are not reporting 90% of your world income