I earned (all figures in USD):
US source interest income (Bank bonus, not taxed in Canada): $1349.81
Canadian source interest income: $2133.04 (only $1876.10 was taxable by Canada)
Net interest income: $3482.85
The $1349.81 of US source interest income is taxable by the US. My US tax liability is $9728. After calculating the FTC's my US tax liability is $0. I should owe tax on this $1349.81 US source income so I am doing something wrong. Im going over the numbers again and cant figure out what I did wrong.
Anyone care to look over my numbers and give their opinion?
screenshots: https://imgur.com/a/5t7dE9F
What am I doing wrong on my return?
Moderator: Mark T Serbinski CA CPA
Re: What am I doing wrong on my return?
The foreign tax credit cannot be more than my total U.S.tax multiplied by the fraction of taxable income from foreign sources. Since I have some U.S. income, it's not possible for the foreign tax credit alone to reduce your total tax to zero.
Cant figure out what I did wrong.
Cant figure out what I did wrong.
Re: What am I doing wrong on my return?
Are you using software? If not, then all bets are off
By the way, not sure why you say your US bank interest is not taxable in Canada. and why Cdn interest would not be taxable in Canada.
Did you move or something. You should indicate this on your post.
The Cdn bank interest goes on a passive 1116 along with your cap gains.
By the way, not sure why you say your US bank interest is not taxable in Canada. and why Cdn interest would not be taxable in Canada.
Did you move or something. You should indicate this on your post.
The Cdn bank interest goes on a passive 1116 along with your cap gains.
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
Re: What am I doing wrong on my return?
The interest I earned in the US are from bank bonuses. Canada does not tax bank bonuses.
$256.94 of the interest I earned in Canada is not taxable by Canada because it was earned in a TFSA.
I do not use software. I did not move, I still live in Canada but sometimes frequent the states and when I do I have a hobby of churning "bank bonuses".
I talked to someone and about what I did wrong on the return and their response was:
"I think I've got it: you're reducing your U.S. taxable income with a capital loss, but not apportioning this as a deduction to your foreign income used for the credit. Each Form 1116 uses only the standard deduction, making the calculated fraction of foreign versus U.S. income too high."
$256.94 of the interest I earned in Canada is not taxable by Canada because it was earned in a TFSA.
I do not use software. I did not move, I still live in Canada but sometimes frequent the states and when I do I have a hobby of churning "bank bonuses".
I talked to someone and about what I did wrong on the return and their response was:
"I think I've got it: you're reducing your U.S. taxable income with a capital loss, but not apportioning this as a deduction to your foreign income used for the credit. Each Form 1116 uses only the standard deduction, making the calculated fraction of foreign versus U.S. income too high."
Re: What am I doing wrong on my return?
Ok. Software would have caught this.
Remember that none of the US tax is eligible for any foreign tax credit on your Cdn return, by treaty.
Remember that none of the US tax is eligible for any foreign tax credit on your Cdn return, by treaty.
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
Re: What am I doing wrong on my return?
Understood.
To solve the incorrect Form 1116 calculations, Should I include the "2479" capital loss on line 3b on each of my Form 1116's?
Pictures: https://i.imgur.com/xRVVP2xg.jpg and https://i.imgur.com/szIqm8Z.jpg
To solve the incorrect Form 1116 calculations, Should I include the "2479" capital loss on line 3b on each of my Form 1116's?
Pictures: https://i.imgur.com/xRVVP2xg.jpg and https://i.imgur.com/szIqm8Z.jpg
Re: What am I doing wrong on my return?
No, it should go on line 5 of your passive 1116. it is a loss that is definitely related to passive income. Line 3 is for non-related expenses, which get prorated (the form even says so).
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