Employer issued T4 and W2 for 2022 for first time

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Grad467_2
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Joined: Wed Apr 15, 2020 6:57 pm

Employer issued T4 and W2 for 2022 for first time

Post by 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
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Re: Employer issued T4 and W2 for 2022 for first time

Post by 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.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Grad467_2
Posts: 40
Joined: Wed Apr 15, 2020 6:57 pm

Re: Employer issued T4 and W2 for 2022 for first time

Post by 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
Posts: 40
Joined: Wed Apr 15, 2020 6:57 pm

Re: Employer issued T4 and W2 for 2022 for first time

Post by 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
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Re: Employer issued T4 and W2 for 2022 for first time

Post by 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.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Grad467_2
Posts: 40
Joined: Wed Apr 15, 2020 6:57 pm

Re: Employer issued T4 and W2 for 2022 for first time

Post by Grad467_2 »

Nelsona,

Thank you so much again for your input.

Regarding your quote below:

"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."

My FICA wages were determined assuming I worked 100% in the US whereas my Fed & State taxes were based on actual time I worked in the US.

Should I use my US-sourced wages from my 1040NR and multiple by 6.2% and 1.45% (for SS and Medicare, respectfully), then use these calculated amounts (plus my overall Fed & State taxes I paid) as a FTC to be reported on my Canadian return and then use the difference between actual FICA taxes withheld and FICA calculated and use this difference in "other deductions" (20(12) deduction via line 23200) or do I simply use all of the FICA withheld taxes (1:1) as part of my FTC? Also, would I have to multiple the FICA percentages above (assuming my thinking is correct) by adding wages plus 401K contributions or simply wages alone (I assume the latter would apply?)?

The reason I am asking is when I calculated my FICA based on wages made in the US alone (not including 401K contributions), they work out to just about half then what was reported on my W2 so I don't know whether I can use the whole FICA withheld amount as they currently show on my W2 or use a calculated percentage with the difference being used on line 23200.

Thanks once more for any feedback (and your patience)
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Re: Employer issued T4 and W2 for 2022 for first time

Post by nelsona »

For FICA, since you have paystubs, I would simply report the FICA that was withheld up to your last paycheck reported on your Canadian return.

Some of your withheld income (401(k), medical, etc) can have an effect on your FICA withholding.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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