Line 10400 Other Employment Income

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akumar
Posts: 20
Joined: Sat Sep 14, 2013 8:24 pm

Line 10400 Other Employment Income

Post by akumar »

Hello,

I have just had my tax return reassessed. In the process of reviewing the documents I submitted, the CRA increased line 10400 "Other employment income" to include all income from W2 (Box 5) as opposed to W2 (Box 1 + Box 12 D, E, F, S).

I believe this is mistake can someone please confirm.
nelsona
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Re: Line 10400 Other Employment Income

Post by nelsona »

Maybe for the benefit of others, you could n=mention what each of these boxes represent.
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nelsona
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Re: Line 10400 Other Employment Income

Post by nelsona »

These are all elective deferrals or contributions to retirement plans, which lower your Box 1 amount for US purposes. But these are not deductible from salary in canada.

Retirement contributions should be deducted on the same line as your RRSP contributions, once you fill form RC268, to detrmine the deduction limit.
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nelsona
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Re: Line 10400 Other Employment Income

Post by nelsona »

This goes back to the difference in W-2 and T4s in terms of deductions. In US, if something from your wages is deductible, the IRS simply has the employer reduce the taxable wages right off the bat. In Canada, CRA requires that you actually take the deduction on a later line (medical, union dues, pension contributions), even though they have exactly the same effect of reducing your taxable wages.
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akumar
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Re: Line 10400 Other Employment Income

Post by akumar »

Nelsona who originally advised that Cdn wages were calculated from W2 (Box 1 + Box 12 D, E, F, S). Not W2 Box 5.

Only Box 12D is populated on my W2 (the 401K contribution). Our company offers a deferred income plan, this is not listed separately on the W2, but the amount is included in Box 5. This is a deferral which is paid out after I leave the company and then will be taxed on.

For the benefit of others Box 5 is your gross wages (which Medicare and local taxes are applied on). Box 1 is your net wages after pension plans/deferrals which federal and state taxes are applied on.
nelsona
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Re: Line 10400 Other Employment Income

Post by nelsona »

If box 5 is your gross wages, ALL your wages with NOTHING taken off, then this is what is to be reported as income to CRA. Any reduction to this amount has to be accounted for elsewhere on your Cdn tax return.
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nelsona
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Re: Line 10400 Other Employment Income

Post by nelsona »

Box 5 is merely the convenient way of determining gross wages, since there is no ceiling on what is subject to Medicare tax, and it includes all the items I mentioned earlier. Salary deferral, unless under a plan prescribed by CRA is taxable in the year it is EARNED, not paid out.

I doubt that your employer's plan is a prescribed plan for CRA purposes. But I will leave that with you.
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akumar
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Re: Line 10400 Other Employment Income

Post by akumar »

Thanks, if this turns out to be the case then what happens when the deferral is paid out. My company will issue a W2 and deduct US federal and state taxes , how do I receive credit for income already taxed in Canada.
nelsona
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Re: Line 10400 Other Employment Income

Post by nelsona »

In US the year of income and year of taxation do not have to match like in Canada, so there will be an opportunity to use the tax you pay now later, but within 10 years.

If that doesn't work for you. you may consider NOT deferring compensation, since it is not benefitting you at all, as you are not saving any Cdn tax, and probably won't later either. You could ask CRA to exclude that income at that time, but it may not save you any overall taxes even then.

If you are working in US and living in Canada, focus on lowering your CDn tax, not necessarily your US one.
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MiaSpafford
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Joined: Sat Jul 31, 2021 4:08 am

Re: Line 10400 Other Employment Income

Post by MiaSpafford »

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Re: Line 10400 Other Employment Income

Post by Mortimer »

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Post by xuzyrici »

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