HBP Repayment

toad · Post by **toad** » Fri Feb 18, 2011 8:50 am

Hi,

I did NOT pay back my outstanding amounts on my HBP within 60 days of moving residency to the USA. It appears I must claim this as income on my departure tax return... so the question is, do I have to include this amount as world income on my US resident tax return if i file as a full year resident? I am also assuming that If I file dual-status, I do not have to include this amount since it is part of the departure amount. Is this correct?

Thanks!!!

nelsona · Post by **nelsona** » Fri Feb 18, 2011 9:42 am

You do not report thisas income on your uS return regardless of how you file in US.

toad · Post by **toad** » Fri Feb 18, 2011 10:09 am

Makes sense, thanks for the clarification.

toad · Post by **toad** » Sun Mar 27, 2011 8:11 pm

Can I include the tax paid on this HB repayment on my 1116 Form?

ie. HBP balance is included on my Canadian departure return, and I must pay tax on it, but HBP balance is NOT included on my US return - however I still get to claim a credit for the tax paid....

nelsona · Post by **nelsona** » Mon Mar 28, 2011 7:33 am

You can use it as a credit, but since you theHBP non-repayement isn't income on your 1040, it likely won't add to your usable credit on form 1116. It will be available for carryforward however.

You could use all your Cdn tax, incuding that generated by the HBP inclusion, as a deduction

toad · Post by **toad** » Mon Apr 11, 2011 8:03 am

It looks like including it as a deduction may be the best option for me. Am I allowed to include all Canadian tax paid throughout the year? ie. tax paid on Canadian income (rental and normal) for my time period I was a Canadian resident (non-USA resident), my departure tax amount, and tax paid while a Canadian non-resident (USA resident) on my rental income?

My understanding is if I was to use the credit option, I can only use tax paid while a resident of the USA.

I am planning on filing a dual-status return with the USA (I moved from Canada to USA halfway through the year). Can I claim these deductions all on my 1040?
If so, that works out really well.

nelsona · Post by **nelsona** » Mon Apr 11, 2011 8:09 am

If you file full year, you are allowed to use all tax from the entire year, just like you can use any other deductions. US citizens use his even when living full time in canada,

If you file part-year, then only the ammounts you paid while resident (the 1040 paortion) are eligible.

Remember, the tax jas to be PAID in that portion of the year, not simply arisen in that pert of the year.

Your HBP non-repayment tax only would be paid on your 2010 departure return, which would be filed in 2011.

And if you use the deduction for a year, you can;t use the credi, or carry forward any foreign tax.

nelsona · Post by **nelsona** » Mon Apr 11, 2011 8:10 am

I would be reconsidering dual-status.

toad · Post by **toad** » Mon Apr 11, 2011 8:20 am

The reason why I am looking at Dual Status instead of Married Filing Jointly is I have $20k of scholarship income with only $6k of elgible expenses for 2010. In the Canada this was tax free, but in the USA I have to pay tax. Is there a way I can use the departure tax as a credit against this income for 2010?