From RRSP withdrawal my pensions income on line 16a is US$13,938 and US taxable income is US$2651 (gain after becoming a US resident) on line 16b. I have paid Canadian taxes of US$3415.
So I pro-rated the taxes paid to Canada according to the taxable pension income for US (in other words the Canadian taxes paid on the US taxable income of US$2651)= $668
On form 1116: What category do I report the income – General limitation income?
Part I: 1. US$2651 (this is the taxable income according to the instructions for line 1 from instructions for 1116 page 13) is this correct?
2. -> left blank
3. -> left blank
4. -> left blank
5. -> left blank
6. -> left blank
7. US$2651
Part II: This is where it gets confusing for me !!!
TD Bank at withdrawal only withheld 20% in Feb 24th 2004 of US$247 and I had to pay to the Revenue Canada US$66 on Feb 2005 for the balance of 5%
Then Royal bank at withdrawal withheld 25% in Feb 25th 2004 of US$353.
What date should I give for (o) Date paid or accrued? There are 2 different dates in 2004 the taxes withheld by 2 different banks and another different date in 2005 I paid the remaining taxes to RC
My RRSP was in GIC and Savings accounts so the gain came from interest.
So should I put US$247 + US$353 = US$600 under taxes withheld at source on: (v) interest?
So Can I then put taxes I paid to Revenue Canada in Feb 2005 (US$66) in (w) Other foreign taxes paid or accrued?
On line 8 & 9 & 13: the total taxes paid (on US$2651 US taxable income) = US$668
On line 14 & 16: $2651
On line 17: amount from line 40 of 1040 - XXX
Then for line 18: I divided $2651 by XXX and let’s say I got 0.035
For line 20 I multiply 0.035 by line 43 of 1040 to come up with tax. Is this correct?
Questions on form 1116 Please!
Moderator: Mark T Serbinski CA CPA
General limitation.
Howevewr, you do not pro-rate the Cdn tax paid: you include all of it on 1116, and let the forms calculation reduce the credit.
Pick a date. It doesn't matter.
You really should let the software handle this, as your line 3 should not be blank. It should incluse either your standard deduction or your sched A deduction.
You will be left with a large foreign tax carryover, which you can use in future, and may go lost.
You might want to consider using the entire Cdn tax asa deduction instead, it may get you more this year.
<i>nelsona non grata... and non pro</i>
Howevewr, you do not pro-rate the Cdn tax paid: you include all of it on 1116, and let the forms calculation reduce the credit.
Pick a date. It doesn't matter.
You really should let the software handle this, as your line 3 should not be blank. It should incluse either your standard deduction or your sched A deduction.
You will be left with a large foreign tax carryover, which you can use in future, and may go lost.
You might want to consider using the entire Cdn tax asa deduction instead, it may get you more this year.
<i>nelsona non grata... and non pro</i>
Thank you so much Nelsona![:)]
I am almost done. But confused about few places
I read the instructions for form 1116. It says on page 14 for line 3 deductions, the gifts to charity made after July 27, 2004 should be considered. Why July 27, 2004?
Then it says for the tax year ending after July 27, 2004, you can elect to omit these contributions from line 3a. Please explain this if anyone has dealt with this situation before? Does the 2004 tax year qualify for that?
For line 4a: it says if your gross foreign source income (including income excluded on Form 2555) does not exceed $5,000, you can allocate all of your interest expense to U.S. source income.
Now my situation: from RRSP withdrawal on line 16a is US$13,938 and US taxable income is US$2651. So does my gross foreign source income exceed $5000? They talk about including excluded income!!
How do I treat the state taxes withheld from my US income?
I took a deductible on line 5 in Schedule A for state taxes withheld. It says that I have to make the special allocations of the state taxes I paid. But I have not paid the state taxes for that income yet. I had my company withheld state taxes based on my US wages. I will probably get a refund had I not have the foreign income
Thanks in advance for any help [;)]
I am almost done. But confused about few places
I read the instructions for form 1116. It says on page 14 for line 3 deductions, the gifts to charity made after July 27, 2004 should be considered. Why July 27, 2004?
Then it says for the tax year ending after July 27, 2004, you can elect to omit these contributions from line 3a. Please explain this if anyone has dealt with this situation before? Does the 2004 tax year qualify for that?
For line 4a: it says if your gross foreign source income (including income excluded on Form 2555) does not exceed $5,000, you can allocate all of your interest expense to U.S. source income.
Now my situation: from RRSP withdrawal on line 16a is US$13,938 and US taxable income is US$2651. So does my gross foreign source income exceed $5000? They talk about including excluded income!!
How do I treat the state taxes withheld from my US income?
I took a deductible on line 5 in Schedule A for state taxes withheld. It says that I have to make the special allocations of the state taxes I paid. But I have not paid the state taxes for that income yet. I had my company withheld state taxes based on my US wages. I will probably get a refund had I not have the foreign income
Thanks in advance for any help [;)]
Thank you so much Nelsona. I am so glad that I found this forum. I was clueless.
Yes I will buy the tax software.
Can I bother you one more time? Please don't get mad with me for asking too many questions!
Do you know where IRS got that date; July 27, 2004 and do I qualify to omit charitable donations since the tax year I am filing is ending December 2004?
Can I also omit the RRSP withdrawal amount that was excluded before I became a US resident and report my gross foreign source income as US$2651 (income reported on line 16b). Then I don't have to take a deduction on line 4a on 1116.
[For line 4a: it says if your gross foreign source income (including income excluded on Form 2555) does not exceed $5,000, you can allocate all of your interest expense to U.S. source income]
Yes I will buy the tax software.
Can I bother you one more time? Please don't get mad with me for asking too many questions!
Do you know where IRS got that date; July 27, 2004 and do I qualify to omit charitable donations since the tax year I am filing is ending December 2004?
Can I also omit the RRSP withdrawal amount that was excluded before I became a US resident and report my gross foreign source income as US$2651 (income reported on line 16b). Then I don't have to take a deduction on line 4a on 1116.
[For line 4a: it says if your gross foreign source income (including income excluded on Form 2555) does not exceed $5,000, you can allocate all of your interest expense to U.S. source income]
You can't exclude anything from 2004 since you are filing a full year 1040. You ahve to include all your Cdn income, possible excluding any Cdn wages your received by using 2555.
I really wouldn't bother getting more complicated.
The July 27 thingy, without looking, is obviously the date that the reg about not having to apportion chairty came into effect. As the wording says, you don't have to apportion any of your charity, regardless of when in the year it happened.
<i>nelsona non grata... and non pro</i>
I really wouldn't bother getting more complicated.
The July 27 thingy, without looking, is obviously the date that the reg about not having to apportion chairty came into effect. As the wording says, you don't have to apportion any of your charity, regardless of when in the year it happened.
<i>nelsona non grata... and non pro</i>
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote"><i>Originally posted by nelsona</i>
You can't exclude anything from 2004 since you are filing a full year 1040. You ahve to include all your Cdn income, possible excluding any Cdn wages your received by using 2555.
<i>nelsona non grata... and non pro</i>
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
I am new in the US and don't know that much tax matters. I am working in the US and only income I had from Canada was RRSP withdrawal.
I guess I may not be asking questions clearly. My question was: Can I exclude the amount (line 16a - line 16b of 1040) for calculating apportion on form 1116 4a (home mortgage interest)
In other word I withdrew $13900 RRSP and US taxable income was $2650
Can I consider only $2650 as foreing source income for apportioning on line 4a of 1116?
You can't exclude anything from 2004 since you are filing a full year 1040. You ahve to include all your Cdn income, possible excluding any Cdn wages your received by using 2555.
<i>nelsona non grata... and non pro</i>
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
I am new in the US and don't know that much tax matters. I am working in the US and only income I had from Canada was RRSP withdrawal.
I guess I may not be asking questions clearly. My question was: Can I exclude the amount (line 16a - line 16b of 1040) for calculating apportion on form 1116 4a (home mortgage interest)
In other word I withdrew $13900 RRSP and US taxable income was $2650
Can I consider only $2650 as foreing source income for apportioning on line 4a of 1116?
Your Foreign income is $2650.
As I said earlier, you may be spending a lot of time angling your foreign credit (whicch would go much faster with software), when, in the end you may just take the foreign tax deduction and be done with it (again, the decision will be made much more quickly with software).
Are you getting the message.
I'm not answering any more questions on this thread, as they are purely mechanics.
<i>nelsona non grata... and non pro</i>
As I said earlier, you may be spending a lot of time angling your foreign credit (whicch would go much faster with software), when, in the end you may just take the foreign tax deduction and be done with it (again, the decision will be made much more quickly with software).
Are you getting the message.
I'm not answering any more questions on this thread, as they are purely mechanics.
<i>nelsona non grata... and non pro</i>
Yes Sir,
Thank you for your patience with me [:D]
I spoke to 2 different people in IRS Philadelphia foreign tax branch they told me even after checking with their superiors that I cannot take the full deduction of the foreign taxes paid for the excluded income regardless of type of exclusion. It is not very clear in instructions for 1116 and pub 514 but they must have internal revenue bulletin explaining that in principle we can’t take the full deduction.
I will leave this thread with that infor for any one on the forum who is interested in this matter
Thank you for your patience with me [:D]
I spoke to 2 different people in IRS Philadelphia foreign tax branch they told me even after checking with their superiors that I cannot take the full deduction of the foreign taxes paid for the excluded income regardless of type of exclusion. It is not very clear in instructions for 1116 and pub 514 but they must have internal revenue bulletin explaining that in principle we can’t take the full deduction.
I will leave this thread with that infor for any one on the forum who is interested in this matter