Article XXV for Canadian Residents

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

nikitapunch
Posts: 24
Joined: Wed Sep 02, 2015 10:21 pm
Location: Canada

Re: Article XXV for Canadian Residents

Post by nikitapunch » Mon Apr 08, 2019 8:54 am

I filled out the 1040 up to line 11 only and put an 'X' on the rest of the form. The tax amount on line 11 is all you need for the calculation.

I wasn't sure about the signing part myself. I don't think so but I had my husband sign it anyway.

With regard to the amount on line 11 I was looking at taking it a step further up to line 13 to take into account a foreign tax credit (paying Canadian taxes from the same US source income I reported and actually the only tax on that income I will pay to Canada) but not sure about that now.

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Article XXV for Canadian Residents

Post by nelsona » Mon Apr 08, 2019 11:29 am

As I've explained before, many times, one is not allowed to claim FTC on the pro forma, because, by treaty, the pro forma deems all income as being US-sourced. You can deduct the Cdn taxes paid in the tax year. line 11. Period.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nikitapunch
Posts: 24
Joined: Wed Sep 02, 2015 10:21 pm
Location: Canada

Re: Article XXV for Canadian Residents

Post by nikitapunch » Mon Apr 08, 2019 12:58 pm

nelsona. I did confuse this.

Wow. That is much easier than I thought. I take what I ended up with on line 11 and then last step to subtract the taxes paid. That I was missing. Simple enough.

I will add a cover letter to explain what I am doing. Otherwise I don't think they will know why I did that.

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Article XXV for Canadian Residents

Post by nelsona » Mon Apr 08, 2019 3:54 pm

I don't know what you mean. Taxes paid go on your 1040NR, NOT on 1040. You stop at 11.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Article XXV for Canadian Residents

Post by nelsona » Mon Apr 08, 2019 3:55 pm

You still need to finish 1040NR
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nikitapunch
Posts: 24
Joined: Wed Sep 02, 2015 10:21 pm
Location: Canada

Re: Article XXV for Canadian Residents

Post by nikitapunch » Mon Apr 08, 2019 6:07 pm

Correct and thank you nelsona. I was aware I need to complete the 1040NR.

papillary
Posts: 25
Joined: Wed Mar 20, 2019 7:19 pm

Re: Article XXV for Canadian Residents

Post by papillary » Tue Apr 09, 2019 1:56 pm

Nelsona or Nikitapunch

what is meant by this phrasse "You can deduct the Cdn taxes paid in the tax year"

if my worked in canada and she paid taxes (deducted on pay check), I would reduce her income that I am going to report on the pro forma by that X amount of taxes that she paid. ?

let us say she earned equivalent of 10,000 USD in canada, and paid 500 in taxes (deducted from paycheck), in reporting world income we would report her part of the income as 9500 instead of 10000, is that what you mean?

nelsona
Posts: 15980
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Article XXV for Canadian Residents

Post by nelsona » Tue Apr 09, 2019 3:20 pm

Foreign taxes PAID during the tax year (and not later refunded) can always be taken on 1040 as an itemized deduction, INSTEAD of towards credit on a form 1116.

Since 1116 cannot be used on the XXV(3) pro forma, then deducting them is the only option. You still have to report ALL the Cdn income and then have to use schedule A.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nikitapunch
Posts: 24
Joined: Wed Sep 02, 2015 10:21 pm
Location: Canada

Re: Article XXV for Canadian Residents

Post by nikitapunch » Tue Apr 09, 2019 11:04 pm

If all totals on Schedule A for the pro forma 1040 with taxes paid to Canada and not refunded (or anything else added) is then less than the standard deduction then one is better off taking the standard deduction. That makes sense and I believe you mentioned that in another post.

For 2018 MFJ the standard deduction is high so coming back to what I have I won’t report any Canadian taxes paid on pro forma 1040 go up to line 11 and done for that.

Then finish my 1040NR with the pro forma calculation (added to the tax line) and continue from that line till I complete the whole return.

Finally I am almost done.

Post Reply