Foreign tax credit

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
brianbbc
Posts: 87
Joined: Fri Apr 25, 2014 9:17 pm

Foreign tax credit

Post by brianbbc »

I have an interesting question if someone wants to answer: Canadian citizen only, moved back from usa to Canada July 2020. Filing form 1040 for full tax year. Due to covid, made a little employment income and passive bank interest in usa, passive bank interest Canadian bank also. Did my 1040, because of low income, required to pay IRS $3500 for the year, but, because of their child tax credit adjustment, I owe no IRS taxes and get to keep the $3500. So technically I owed taxes but got it back.
It's probably a no brained (but I've been surprised before) that I am Not allowed to claim the foreign tax credit to the CRA cause I never did pay federal usa taxes. I imagine the reverse is true for the cra taxing me on a small amount of Canadian earned income as a new resident, but with tax credits, I don't actually owe them anything.
The reason I'm interested is I still have room in my child tax credit so if I did pay foreign taxes, I could use that to maximize my child tax credit refund. If that's possible at all.
nelsona
Posts: 18363
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Foreign tax credit

Post by nelsona »

The child tax credit reduced your US tax, and thus reduced US tax available for tax credit on your Cdn return.

The stimulus payments are NOT considered as lowering your US tax.

Don;t forget that on your 1040, you must also include any Cdn income you earned.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Post Reply