How do I report my Canadian refund on U.S. return
Moderator: Mark T Serbinski CA CPA
How do I report my Canadian refund on U.S. return
I am a U.S. PR employed by a Canadian employer.
I completed my Canadian 2013 taxes and filed and extension for my U.S. taxes. The Canadian government gave me tax refund for 2013. The time has come to start estimating my what I owe the U.S. (if anything) - how do I account for the refund (some of which is due to straight up being taxed too much at the time of payment, as opposed to deductions)?
If this has been discussed before, can someone point me to a url. I've searched, but haven't done well.
Thanks!
I completed my Canadian 2013 taxes and filed and extension for my U.S. taxes. The Canadian government gave me tax refund for 2013. The time has come to start estimating my what I owe the U.S. (if anything) - how do I account for the refund (some of which is due to straight up being taxed too much at the time of payment, as opposed to deductions)?
If this has been discussed before, can someone point me to a url. I've searched, but haven't done well.
Thanks!
Hello,
Your refund on your Canadian return should be accounted for when you figure your foreign tax credit on your US return.
For your Canadian source income, some amount would have with withheld, let's say they withheld $20,000 of tax. If your refund was $2,000, then you would figure your foreign tax credit on your US return to be $18,000, since this is your total Canadian tax liability. Refund or no refund, what matters is how much tax you paid on that income. Remember, if there were amounts deducted for CPP and EI these may also be used as foreign tax credits on your US form 1116 as "general limit" category. I hope this helps.
Your refund on your Canadian return should be accounted for when you figure your foreign tax credit on your US return.
For your Canadian source income, some amount would have with withheld, let's say they withheld $20,000 of tax. If your refund was $2,000, then you would figure your foreign tax credit on your US return to be $18,000, since this is your total Canadian tax liability. Refund or no refund, what matters is how much tax you paid on that income. Remember, if there were amounts deducted for CPP and EI these may also be used as foreign tax credits on your US form 1116 as "general limit" category. I hope this helps.
To clarify,
the CPP and EI would be used against the Cdn wages reported on your 1040 (yes, wages are general limit income for FTC purpses).
This would only be if one uses 1116 against wages, of course, rather than 2555. If one uses 2555 to exclude wages, then none of the income tax related to those wages, nor EI and CPP are ceditable on 1116.
the CPP and EI would be used against the Cdn wages reported on your 1040 (yes, wages are general limit income for FTC purpses).
This would only be if one uses 1116 against wages, of course, rather than 2555. If one uses 2555 to exclude wages, then none of the income tax related to those wages, nor EI and CPP are ceditable on 1116.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Your refund is a non-entity, as I said before. Your TAXES are what was calculated on your Cdn tax return. What you overpaid earlier and were refunded doesnt matter.
You made $XX and were taxed $YY on your return. Forget the refund.
Split $YY among the various types of income you had: passive and general limit.
You made $XX and were taxed $YY on your return. Forget the refund.
Split $YY among the various types of income you had: passive and general limit.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
In goes in Part II Foreign taxes paid or accrued. I don't help with filling forms, so that is all I will say about that.
You do need to split the $YY between passive (interest, etc) 1116, and geenral limit (wages) 1116, assuming you di not use form 2555.
You are using tax software, of course, right? This seems a bit over your head to be doing by hand. Software will guide you through.
You do need to split the $YY between passive (interest, etc) 1116, and geenral limit (wages) 1116, assuming you di not use form 2555.
You are using tax software, of course, right? This seems a bit over your head to be doing by hand. Software will guide you through.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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That's the problem with extensions....give people a reason to put off filing.
Phil
Phil
Phil Hogan, CA, CPA (Colorado)
Cross-border investment advisor
http://philhogan.com
250-661-9417
Victoria BC
Cross-border investment advisor
http://philhogan.com
250-661-9417
Victoria BC