Employer issued T4 and W2 for 2022 for first time

[Grad467_2]

I am a Canadian commuter working for a US employer and for 2022, our employer decided to split our income based on WTF (Canada) and working in the office (US). On the T4 in box 14, they entered the full wages made for the year (converted to Canadian $). For the W2, they entered the US wages earned based on time in the US in box 1 but full US wages for boxes 3 & 5. Fed (and State - US only) were split between T4 and W2 based on percentage worked in Canada / US.

My question is this - how would I treat Foreign Non-Business (employment) income when calculating FTC? I assume I should use "Box 3" and not "Box 1+ Box 12D"? If the latter is used, due to sourcing split, it seems I wouldn't get 100% of paid US tax credit (Federal tax liability+State tax liability +Social+Medicare)?

Thank you in advance as always for any help..

[nelsona]

Since you live in canada, ALL your income is taxable in Canada, so report all of it on your T1.

For US, simply report only the wages that were US-sourced on your 1040NR, and use those wages, along with the tax calculated on 1040NR, state tax return, FICA and SS towards your foreign tax credit.

Don't worry so much about boxes, determine the wages. Remember when determining US-sourced income, to add back any 401(k)-type contributions you made into your wages, and then fill out the correct RC form for 401(k) contributions on your Cdn return.

If it turns out you can't use all your US tax as determined above, you may have to use a more sophisticated filing method in US to reduce your overall tax.

[Grad467_2]

As always, thank you nelsona.

I assume the FTC amounts paid to the US that I would be able to declare 1:1 regardless of wages rather how much I actually paid.

Relative to your comment "Remember when determining US-sourced income, to add back any 401(k)-type contributions you made into your wages, and then fill out the correct RC form for 401(k) contributions on your Cdn return.", the US-sourced income was determined by my employer and after going back and forth with them regarding how many days I actually worked versus the wages they reported on the W2, they ended up issuing me a W2C which pretty much matches the days I worked in the US.

My question is this - can I report all of my 401K contributions for 2022 re: the RC268 or do I have to only report the number based on the number of days worked in the US? In other words, if I worked in the US 60% of the time and I contributed $10k USD total for 2022, would I report $10K USD or $6K USD on the RC?

[Grad467_2]

After further regarding nelsona's response and based on the comment "Since you live in canada, ALL your income is taxable in Canada, so report all of it on your T1.", I assume I would be able to report 100% of my 401k contributions ($10K ex I gave)?

[nelsona]

You would report this as income added to your wages. then you would reduce your taxable income by filing the correct RC268 and reporting the result on the correct line.