Form 1116: Should US source income be excluded?

[Alex]

I am USC in Canada with wage income only in Canada, but passive income from both US and Canada. I expect only to owe tax in Canada.

The way Form 1116 (line 1. a) is worded suggests that I should only include my passive income from Canada on my passive income 1116.

But Canada also taxes worldwide income, so my US source income is subject to Canadian tax, which might suggest including it too.

So, if I had 2,000 in passive income of which 1,000 was US source, would I put 1,000 or 2000 on line 1.a. of passive Form 1116?

Thank you.

[nelsona]

You should use 2555 to exclude your Cdn wages. But if you insist on using 1116, you will have 2 forms: 1 passive for rental, and 1 general limit for wages.

Only the Cdn rental income can appear on the passive 1116.

[Alex]

Thank you for your quick helpful response. Would the same apply to dividends earned on US stocks held in a US dollar trading account at a Canadian bank? How about interest earned in a U.S. bank?

[nelsona]

These are both US spourced income, and are not eligible toward any foreign tax credit.

[Alex]

Last year my Canadian wife earned more than me and ended up contributing as much or maybe more to our joint expenses. Can I still file as "Head of Household" or do I have to file "Married filing separately"? If I can do either one is there an advantage to one or the other. (I know it is often advised to file jointly, but my wife doesn't want to file US taxes since she doesn't have to.)

[Alex]

Sorry. I meant to post this as a new topic. I will re-post as a new topic. Please ignore my last post and thank you for your earlier replies.