Reporting U.S. employment income on Canadian return

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sszaw
Posts: 1
Joined: Tue Mar 16, 2021 8:14 am

Reporting U.S. employment income on Canadian return

Post by sszaw »

Background:
I am a non-resident for U.S. tax purposes and resident for Canada. I had a short employment in the U.S. in 2020 and received employment income.

Question 1)
When I want to claim the foreign tax credit to CRA, do I report the tax withheld by the IRS and state or do I first calculate what I actually owe to the IRS on 1040NR and claim the tax withheld minus the refund?

Example: Gross income of 40000$ and 10000$ was withheld by IRS. I will get a 5000$ refund when I fill out my 1040NR. Is my foreign tax credit 5000$ or 10000$?

Question 2)
Can I just claim the tax withheld (whatever is on my W-2) and then report the refund I receive from the IRS as income on the next year's (2021) return?
elgoog
Posts: 84
Joined: Thu Sep 19, 2019 9:40 pm

Re: Reporting U.S. employment income on Canadian return

Post by elgoog »

Only answering Question 1:
Nelsona can clarify but I believe it's the foreign tax you actually paid and not what was withheld. So, you would first have to figure out the tax for IRS Federal and State and then use those amounts ($5000 as per your example) to report to the CRA.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Re: Reporting U.S. employment income on Canadian return

Post by nelsona »

It is never the tax withheld that is used for foreign tax credit on the Cdn return, It is always the tax calculated on the tax return(s).
It is NEVER the way you describe in (2).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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