Canadian T4E on US taxes

mrkwkkrn · Post by **mrkwkkrn** » Sun Apr 05, 2015 4:52 pm

Hello

Thanks for all your help last year!

I moved to the USA on a K1 visa in October 2013, was married Nov 2 2013, and received EI income from Canada while looking for work (February 2014 - August 2014).

I received a T4E from the CRA, and I am wondering if I have to include this on my US taxes, or is this just for information. Or do I need to file my Canadian taxes again and include this information? I filed my exit return last year, and included/excluded my CDN income on my US return.

Thanks!
Mark

NowSouth · Post by **NowSouth** » Sun Apr 05, 2015 5:37 pm

I'm still trying to figure out the US taxation issues, but I do know for certain through discussion with Canada Revenue agency, that we do not include the T4E numbers on our Canadian return for 2014.
I had initially added it in as part of my income, but once I confirmed it was not to be included, removed it from line 119 and of course the tax withheld, from line 437. That essentially increased my refund by $500!, lucky for me.

If my reading so far is correct, once residency starts in the US, we do need to have the US be aware of our worldwide income and am hopeful that it qualifies for a foreign tax credit since the required 25% withholding taxes were removed in Canada (yes, 25%, which I confirmed both with CRA and EI, as I had hoped it was like most other incomes taxed at only 15%)

nelsona · Post by **nelsona** » Mon Apr 06, 2015 12:27 pm

It does need to be included on US taxes however, and the 25% tax can be used as a credit.

mrkwkkrn · Post by **mrkwkkrn** » Tue Apr 07, 2015 10:11 pm

Thanks nelsona!

Would i apply it as foreign earned income, and then include the taxes as a foreign tax credit using form 1116?

Thanks,
Mark

nelsona · Post by **nelsona** » Wed Apr 08, 2015 7:21 am

it is not considered earned income it is foreign income.
you must use form 1116

mrkwkkrn · Post by **mrkwkkrn** » Sat Apr 11, 2015 3:36 pm

Can you explain where I should actually enter the EI as foreign income? On a 1099-G, using my address, or under the foreign earned income section? I am using turbotax.

Thanks so much, I hope you are going crazy with tax season!

nelsona · Post by **nelsona** » Sat Apr 11, 2015 4:11 pm

you will have tofigure that out. it goes on the unemployment line

mrkwkkrn · Post by **mrkwkkrn** » Sat Apr 11, 2015 4:38 pm

So far no luck figuring it out, but I am sure I can.

Two more questions - I have been reading about filing section 217. Does this apply to me, and would it be beneficial? It seems very complicated. Also do I need to file a Canadian return for 2014?

Thanks,
Mark

nelsona · Post by **nelsona** » Sat Apr 11, 2015 8:51 pm

How did you file in Canada for 2013?

nelsona · Post by **nelsona** » Sat Apr 11, 2015 8:52 pm

And what was your other income for the year, in US and in Canada. That will determine whether 217 is beneficial.

mrkwkkrn · Post by **mrkwkkrn** » Sat Apr 11, 2015 9:53 pm

I made 14000 CDN (from EI) and roughly $10,000 US (from my job which i started in September 2014).

mrkwkkrn · Post by **mrkwkkrn** » Sat Apr 11, 2015 9:54 pm

As for how I filed in Canada for 2013, what do you mean? I filed my exit return as married.

nelsona · Post by **nelsona** » Sun Apr 12, 2015 12:16 pm

I ask to be sure you filed exit return in 2013, 217 works differently in departure year.

You'll have to try 217 in software (ufile will work) . it probably won't be tax-free because most of your income was from US, but you'll have to run the numbers.''Of course the lower you Cdn tax, the lower your US tax credit.

optism · Post by **optism** » Thu Mar 10, 2016 9:58 pm

Good thread.

Can anyone confirm that T4E income (from EI) and T4RSP income (fom cashed out RRSP) don't need to be reported on a Canadian tax return if that income was received by a non-resident of Canada living in the U.S at the time? If so, does this hold true whether or not one is making a Section 217 election?

More generally speaking, under what scenarios is making a Section 217 election for Canadian EI and RRSP income better than simply claiming a foreign tax credit on a 1040? Is it best to just run both scenarios with tax software and see what comes out best?

nelsona · Post by **nelsona** » Fri Mar 11, 2016 6:27 am

It should not be reported UNLESS you are making a 217 election. Even then, when doing 217 in your departure year, you need to contact CRA.

The reason you want to use 217, if eligible, is that unless you are single, or your spouse doesn't work either, the 1116 usually doesn't use up the 25% tax (especially the RRSP portion, since very little of your RRSP is taxable in US), so you want to minimize the CDn NR tax on that income.