Revenue Canada Not accepting my Foreign Tax Claim

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akumar
Posts: 20
Joined: Sat Sep 14, 2013 8:24 pm

Revenue Canada Not accepting my Foreign Tax Claim

Post by akumar »

Hello,

I work in the USA and reside in Canada.

In June, Revenue Canada requested additional information to support my claim of "income tax paid to a foreign country". In response, as the IRS had yet (and still hasn't) processed my tax return, I submitted W2's, State Transcript and additional payment receipts. I called Revenue Canada prior to and was told this would acceptable and I did not have to wait for the IRS tax transcript.

I got a letter from Revenue Canada today and am puzzled by what they accepted and did not accept:
-Additional federal payments were accepted, but not those on the W2's
-Additional state payments were accepted, but not those on the W2's or even the state transcript
-W2 Medicare and W2 Social Security were accepted
-W2 Municipal payments were not accepted

They have thus adjusted my Tax paid to a Foreign Country down significantly.

This is very puzzling why some claims on the W2 are accepted and others were not.

As the IRS has yet to process my return, I still cannot get a transcript.

Does anyone have any advice?
stewak2
Posts: 109
Joined: Mon Sep 18, 2006 2:47 pm

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by stewak2 »

I'm in somewhat same situation - this is the second time CRA has asked for transcripts. However, the first year they accepted my Federal tax, Social Security, Medicare, and US state tax in the end, after I supplied IRS and State transcripts. I have supplied these again this year and I am waiting for
CRA response.
What additional payments are they denying?
I can't see how they can deny actual tax payments?
akumar
Posts: 20
Joined: Sat Sep 14, 2013 8:24 pm

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by akumar »

It is puzzling what they gave me credit for and what they didn't.

They are not giving me credit for municipal, state and federal taxes paid on the W2, but did give credit for social security and medicare from the W2.

They gave me credit for additional payments I made (as I owed taxes and paid these online)

Since the IRS has yet to process my return (long story), I cannot get a 2018 Account Statement or Return Transcript from them. I did attached the Ohio return transcript but that was not accepted as proof of tax withheld.

Ironically I called Revenue Canada before submitting and was told these receipts would be acceptable.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by nelsona »

It is reasonable that they would treat your FICA payments and your tax withholding differently, since your FICA reported on W2 is final, but your tax payments are not finalized until your Fed/State tax returns are submitted. Tax withheld is really not what is eligible for foreign tax credit - tax accrued for the year is.

That said, CRA is getting awfully picky about what they accept as proof of tax paid.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
pencileveryone
Posts: 23
Joined: Sun Sep 22, 2019 12:10 pm

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by pencileveryone »

Hello akumar,

I was wondering what happened to your situation in the end? I am in a similar situation. Just received a letter from CRA to show 'proof of payment' (IRS Account Transcript) for the foreign tax paid, yet IRS has not received/processed my paper-filed return yet (had to file by paper as spouse is a NRA and did not have a SSN). How did you proceed in this case?
elgoog
Posts: 84
Joined: Thu Sep 19, 2019 9:40 pm

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by elgoog »

I was/am in a similar situation and the IRS is severely backlogged right now. So, you might have to wait a while. You should call the CRA and request an extension. The number should be at the bottom of the review letter that you received.

Another thing that I learned for my last year's review was that providing more documents and proof is better than less. If they reassess your return, you will have to file a formal dispute and they can take a while to get it resolved.
okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by okinawafl »

I had a bit similar situation. I was asked by CRA to provide proof of FTC claimed in my T1 few years ago (for US tax paid for an intern work term in U.S.). If I remember correctly, I can't get transcript but my parent submitted to CRA my 1040NR and state tax returns copy and provided proof of refunds received from IRS and States. CRA accepted my FTC claims on federal and state tax paid but declined about $300 SDI that I paid (showed in W2 box others).
elgoog
Posts: 84
Joined: Thu Sep 19, 2019 9:40 pm

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by elgoog »

Yes, it's a shame that VPDI or SDI cannot be claimed on the Canadian return. I read somewhere that VPDI or SDI are treated as voluntary by the CRA even though they are actually required in California.
okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by okinawafl »

For your reference, my friend just received CRA review letter for the FTC I claimed last year. In the letter, it said "we will accept proof of payment to or refund received from foreign tax authority"

So I think without transcripts from IRS and States maybe ok as long as you provided other required doc & the proof of payment or refund that showed it was paid / refunded with the IRS and States.

Hope this help a bit.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by nelsona »

... and what proof do you presume to provide? Neither fed nor states provide any written acknowledgement of either payment of refund.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by okinawafl »

In my case, I make a copy of my online bank state, it stated refund from IRS and State in the line of the refund credit to my bank account.

BTW, I want to know how we can sign up IRS online? Can we see the a statement showing tax payable and tax refund amount online? would this trigger audit?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by nelsona »

This would not trigger an audit.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by okinawafl »

As I want to access my IRS tax account, I tried to registered online now.

I don't have US phone number yet. IRS website stated that "We'll need one more way to verify your identity. The easiest way is to send a code to your phone by text message (SMS). Your phone must be a U.S.-based mobile phone number associated with your name.
You can also complete identity verification by receiving a letter in the mail. If you choose this method, you'll either need a U.S.-based phone number OR an iPhone, iPad, or Android device to complete registration. that there is mail options but it required either need a U.S.-based phone number OR an iPhone, iPad, or Android device to complete registration." https://sa.www4.irs.gov/eauth/pub/es_phone.jsp

I have an iPhone using in Canada now, is it mean that I need to use my iPhone to register?
Any information sharing on this is great!
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by nelsona »

Well, wouldn't ylou be the one to tell us if it works?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
okinawafl
Posts: 96
Joined: Sun Jul 11, 2021 12:38 pm

Re: Revenue Canada Not accepting my Foreign Tax Claim

Post by okinawafl »

I am sorry if I confuse you.
for FTC, CRA has accepted the refund as one of the proof.

But I still wan to sign up IRS online service but I didn't try before so just wondering how it works.

Thanks.
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