Trailing Tax Liabilities

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Nato1486
Posts: 3
Joined: Fri Mar 22, 2019 12:45 pm

Trailing Tax Liabilities

Post by Nato1486 »

I am a US citizen. My employer transferred me from the US to Canada in November 2019 (10/12 months in US, 2/12 months in Canada). My bonus for 2019 was paid in March 2020 and 10/12 was paid / taxed in USD (to a US account) and 2/12 was paid / taxed in CAD (to a Canadian account). In 2020, I was a resident of Canada for the entire year.

For my 2020 Canadian tax filing, how should I treat the portion of the bonus that was paid / taxed in USD? Would that be considered Canadian income and subject to Canadian income taxes?

Thanks for the feedback.
nelsona
Posts: 17014
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Trailing Tax Liabilities

Post by nelsona »

The entire bonus is reportable in both countries. The portion paid for the US work is US-sourced, the portion paid for the CDn work in Cdn-sourced. This is important for determining foreign tax credits. If your US-portion bonus was less than USD$10K, you can only claim foreign tax credit on 1040 with a re-sourced 1116 form. If it was more than 10K, you claim ftc on your CDn return.
For the portion paid in Canada, you claim tax credit on US return using a "general limit" 1116 form.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
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