Will 2011 Estimated Tax reduce my Canada tax payable?

WindsorON · Post by **WindsorON** » Mon Jan 31, 2011 8:51 am

Hi
Due to the first time home buyer credit, my US tax liability reduces $8000, therefore it increases my Canada tax payable.
In my 1040 form line 73 I have a $6000 overpaid. If I put $4000 into line 75 as 2011 estimated tax. will that help to increase foreign tax credit by $4000 in my Canadian tax return?

Thanks

nelsona · Post by **nelsona** » Mon Jan 31, 2011 9:09 am

No.
The foreign tax credit in canada only applies to actual tax paid and owed.

As I have stressed many times, being overly aggressive in finding US-only tax deductions and credits really is of little value if you still have to file a Cdn tax return.

This is a perfect example. Any new-fangled tax credit that US dreams up, or reduction in taxrate, simply doesn't help you. you need to focus reducing your Cdn taxes.

nelsona · Post by **nelsona** » Mon Jan 31, 2011 9:13 am

Just so we're clear, the IRS tax that you can use on your Cdn return, is the total of your Federal tax that was withheld minus your refund (line 73 of 1040).

Don't bother prepaying your US taxes.