Trailing Tax Liabilities

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
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.
Posts: 17069
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.
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
Post Reply