Out of the circle?

[pradovic]

In order to report world income to CRA, we need income already calculated on US return.
In order to claim foreign tax credit on US return we need Canadian taxes already calculated.
How do we get out of this circle?

[Carson]

In order to report world income to CRA, we need income already calculated on US return.
In order to claim foreign tax credit on US return we need Canadian taxes already calculated.
How do we get out of this circle?

Ahh grasshopper, ancient cross border tax preparer secret!

It can get very complicated. Eg. US citizen or US non resident only? Filing single or joint in US? Part year in Canada or full?

Very simply put, one method is: put gross income and expenses/deductions on both T1 and US return(s). Then calculate the FTC on the Canadian return using the gross US tax. Then using the net Canadian tax after FTC (this gets you out of the most common loop), calculate your US FTC's on F1116. You may also have an additional US FTC from Treaty Article XXIV - see the US F1116 instructions and the FTC Publication for instructions.

It can get very complicated! As you know, there can be circular calculations, especially where there is US AMT and the additional FTC! I recommend you get professional help! And I mean that in the nicest of ways.

[nelsona]

carson is correct. The calcs are governed by article XXIV.

You do the tax credit on the Cdn return first and only once. The ammount is then compared to the non-resident limit. I wouldn't worry about that.

Then you do the 1116 for US based on that result. Then there exisats a posibility of 'bumping up' the 1116 ammounts with various 're-sourcing' maneouvers.