Hello everyone,
Got a job in US in Jan last year and was planning to relocate - but plans changed unfortunately and I just worked for US employer remotely from Canada till the end of Jun and quit. Obviously all taxes were withheld in US.
I didn't work after this till the end of the year and didn't have any income (only family income - spouse). We stayed in Canada, didn't sell any property in Canada and didn't buy any property in US, basically didn't change anything and kept residency in Canada. I occasionally traveled to US but spent less than a month there in total.
I got W2 from employer and it seems like straightforward return to me with 1040NR.
Now,
- Do I understand it right that I have to file taxes with CRA, claim FTC for taxes I owe in US and then pay remaining gap bw US and CAN taxes for the same income amount in Canada?
- Will CRA request explanation on why did I work on W2 and stayed in Canada? What would be the way to document my situation? (In addition to 1040NR, W-2, paycheques and IRS transcripts (when it is ready))
Thank you
Filing Canadian income taxes with W-2 and FTC
Moderator: Mark T Serbinski CA CPA
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- Posts: 2
- Joined: Sun Feb 05, 2023 4:29 pm
Re: Filing Canadian income taxes with W-2 and FTC
file 1040NR and ask for refund of all payroll fed and state income tax withheld. You'll need SSN or ITIN.
Report entire wages on T1 and pay income tax only to CRA.
forfeit FICA withholding unless employer willing to refund it, or, if your employer refuses to refund the taxes, you can file Form 843, Claim for Refund and Request for Abatement for IRS to refund the money to you. The IRS will then send a request to the employer to correct their social security and Medicare reporting and the employer will have to send you a corrected W2c.
If you paid untrue (i.e., you paid someone you didn't owe) FICA without refund, note that in the case of true Social Security and Medicare paid, these amounts converted into CAD may be claimed as tax credits against CRA tax. In the case of untrue FICA withholding CRA cannot discern it's untrue since your W-2 (and even IRS account transcript) reports it. Boils down to claiming FTC on documented tax actually paid but that wasn't actually owed that looks and smells just like claiming FTC on documented tax actually paid that was also actually owed.
Report entire wages on T1 and pay income tax only to CRA.
forfeit FICA withholding unless employer willing to refund it, or, if your employer refuses to refund the taxes, you can file Form 843, Claim for Refund and Request for Abatement for IRS to refund the money to you. The IRS will then send a request to the employer to correct their social security and Medicare reporting and the employer will have to send you a corrected W2c.
If you paid untrue (i.e., you paid someone you didn't owe) FICA without refund, note that in the case of true Social Security and Medicare paid, these amounts converted into CAD may be claimed as tax credits against CRA tax. In the case of untrue FICA withholding CRA cannot discern it's untrue since your W-2 (and even IRS account transcript) reports it. Boils down to claiming FTC on documented tax actually paid but that wasn't actually owed that looks and smells just like claiming FTC on documented tax actually paid that was also actually owed.
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- Posts: 2
- Joined: Sun Feb 05, 2023 4:29 pm
Re: Filing Canadian income taxes with W-2 and FTC
Thank you for detailed explanation.