CPP cannot be claimed as FTC on 1040 due to its inclusion in Totalization Agreement.
EI may be claimed as FTC on 1040 due to its exclusion in Totalization Agreement. It still must meet the four tests of meeting the definition of qualifying 'tax'. EI refunded or credited on T1 must be backed out (only actual paid tax amount is credited).
Section 317(b) (4) of the Social Security Amendments of 1977, Pub. L. 95-216, provides that, notwithstanding another provision of law, social security taxes paid by any individual to a foreign country shall not be deductible by, or creditable against the income tax of, any such individual where an agreement pursuant to section 233 of the Social Security Act has been entered into between such foreign country and the United States.
Totalization agreements can be found via IRS or SSA at:
https://www.irs.gov/individuals/interna ... agreements https://www.ssa.gov/international/total ... ments.html
CPP and EI on 1116 FTC
Moderator: Mark T Serbinski CA CPA
Re: CPP and EI on 1116 FTC
I believe we have already established that the treaty overrides this exclusion, but I will look over it. This has been discused here previously.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: CPP and EI on 1116 FTC
From the TEchnical Explanation of the treaty published by Treasury back in 1985 under
Article II: Taxes covered:
National taxes not generally covered by the Convention include, in the case of the United
States, the estate, gift, and generation-skipping transfer taxes, the Windfall Profits Tax, Federal
unemployment taxes, social security taxes imposed under sections 1401, 3101, and 3111 of the
Code, and the excise tax on insurance premiums imposed under Code section 4371. The
Convention also does not generally cover the Canadian excise tax on net insurance premiums
paid by residents of Canada for coverage of a risk situated in Canada, the Petroleum and Gas
Revenue Tax (PGRT) and the Incremental Oil Revenue Tax (IORT).
******However, the Convention
has the effect of covering the Canadian social security tax in certain respects because under
Canadian domestic tax law no such tax is due if there is no income subject to tax under the
Income Tax Act of Canada.********
Taxes imposed by the states of the United States, and by the
provinces of Canada, are not generally covered by the Convention. However, if such taxes are
imposed in accordance with the provisions of the Convention, a foreign tax credit is ensured by
paragraph 7 of Article XXIV (Elimination of Double Taxation).
This has always been the understanding which overrides IRS regs.
Nothing new.
Article II: Taxes covered:
National taxes not generally covered by the Convention include, in the case of the United
States, the estate, gift, and generation-skipping transfer taxes, the Windfall Profits Tax, Federal
unemployment taxes, social security taxes imposed under sections 1401, 3101, and 3111 of the
Code, and the excise tax on insurance premiums imposed under Code section 4371. The
Convention also does not generally cover the Canadian excise tax on net insurance premiums
paid by residents of Canada for coverage of a risk situated in Canada, the Petroleum and Gas
Revenue Tax (PGRT) and the Incremental Oil Revenue Tax (IORT).
******However, the Convention
has the effect of covering the Canadian social security tax in certain respects because under
Canadian domestic tax law no such tax is due if there is no income subject to tax under the
Income Tax Act of Canada.********
Taxes imposed by the states of the United States, and by the
provinces of Canada, are not generally covered by the Convention. However, if such taxes are
imposed in accordance with the provisions of the Convention, a foreign tax credit is ensured by
paragraph 7 of Article XXIV (Elimination of Double Taxation).
This has always been the understanding which overrides IRS regs.
Nothing new.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: CPP and EI on 1116 FTC
The 'something new' was that in an IRS webcast Thursday (Foreign Tax Credit Creditability Around the Globe Date) IRS specifically stated that Cdn CPP is NOT creditable as FTC in spite of treaty.
Re: CPP and EI on 1116 FTC
"In spite of the treaty" is not a valid reason. Treasury would need to issue a Competent Authority determination.
The treaty would need to be changed. Sounds like more Trumpism.
Until then, keep including CPP premiums as a credit (although, I suspect these don't actually benefit any USC living in Canada).
The treaty would need to be changed. Sounds like more Trumpism.
Until then, keep including CPP premiums as a credit (although, I suspect these don't actually benefit any USC living in Canada).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: CPP and EI on 1116 FTC
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Re: CPP and EI on 1116 FTC
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Re: CPP and EI on 1116 FTC
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