Foreign tax credit carry forwards

[bigrandy]

I am a US Citizen residing and working in Canada. I am usually able to exclude about 90% of my income, with the tax on the remainder wiped out by the foreign tax credit.

I am curious if the "large" foreign tax credit carryforward I keep calculating would ever be of value to me. I fail to see how.

Thanks

[nelsona]

Most Cdns who live in US and have Cdn dealing also build up big FTCs.

Living in Canada, you are unlikley to ever use it, unless you get Cdn income which is tax-free in Canada and taxable in US. Off-hand I can't really think of any, other than Gambling winnings. So play the lottery!

If you move back to US, one such source of income would be Cdn wages under $10,000 per year. So, a n odd job Canada would be tax-free.

Remember though, that the Cdn tax you paid on excluded income by FEIE is NOT eligible to be included in your FTC calculation, so if you make $100,000 and exclude $80,000 wages, only 20% of the Cdn tax you paid is eligible for inclusion on 1116 and carried forward.

I'm thinking that your carry-forward will not be so big.

[nelsona]

Another source, if you move back south, is withdrawls of ~10,000K of RRSP by the non-working spouse. This is tax-free in Canada (by section 217) , but partially taxable (by the RRSP taxable income rules) in US.