Determining Canadian foreign tax paid

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Determining Canadian foreign tax paid

Post by taxcanus »

Can someone tell me exactly how to determine the Canadian "foreign tax paid" for filling out IRS form 1116 (Section II)?

Is this essentially the amount found on Line 43500 of the Canadian T1 return? So, "total payable tax" excluding all the credits such as Canada Workers Benefit, etc?

Line 43500 contains net federal and provincial taxes as well as mandatory self-employment CPP contributions.

All of the Canadian income is general, active, business income from self-employment - no passive investments.
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Re: Determining Canadian foreign tax paid

Post by nelsona »

First off, it is usually best to use foreign tax accrued rather than paid, since "paid" is on a caledar basis rather than a tax year basis.

So, there is no one line that fits the bill. The states has the same problem when they give credit for federal tax. They add certain lines and subtract others.

The simplest way to do it is to add your withholding and installments (lines 43700 + 47900) +/- your balance owing/refund.
If you have EI premiums add those. Your slef-employment CCP and provincial taxes are is already included in your balance.
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