Definition of NET US INCOME re: donations to US charities

expat1000 · Post by **expat1000** » Mon Apr 14, 2008 6:28 pm

fomr the CRA's website,

Can I claim donations made to U.S. charities?

Generally, you cannot claim donations made to U.S. charities on your Canadian income tax.

However, if you have U.S. income, you can claim the eligible amount of any gifts to U.S. charities that would be allowed on a U.S. return up to [u]75% of the net U.S. income[/u] on your Canadian return.

I am a US citizen residing in Canada, I have foreign earned income (US), and US capital losses and US donations.

Does US net income mean;

1. my foreign earned income less any US deductions
or
2. my foreign earned income less the US capital loss.

My tax program -quicktax-automatically decreases the net us income by the capital loss-I am wondering if there is any basis for that.

nelsona · Post by **nelsona** » Mon Apr 14, 2008 6:51 pm

Unless your capital losses are related to US real estate, they are not considered US-sourced, since you live in Canada. If they are, then they count against your US income.

Your US income would also be reduced by any deductions you take on your Cdn return that are specifically related to the US income (not deductions you take on your US tax return). An example would be carrying charges related to US-sourced interest income, or, the expenses deducted for US rental property.

expat1000 · Post by **expat1000** » Tue Apr 15, 2008 9:14 pm

Thank you for the quick response

cfn2007 · Post by **cfn2007** » Fri Dec 26, 2008 5:43 pm

I am trying to find out whether donations to a U.S. charity are of any use to me as a dual citizen living in Canada.

Since I don't itemize on my 1040, I think the answer would be "no" for U.S. taxes; however, from above, it sounds like these receipts could be useful on my Canadian return.

I do not have any US-source earned income or pension income. Can charitable donations be deducted against U.S. passive income (e.g. U.S. dividends and/or interest) on my Canadian return?

Thanks!

nelsona · Post by **nelsona** » Fri Dec 26, 2008 6:22 pm

For Cdn tax purposes, US charitable donations are deductible, subject to the same limits as your Cdn donations. In principal, if the US organization was eligible for charity status in US, it is also eligible in Canada.

Since, generally, you can only deduct donations upto 75% of your total net income, you can only deduct US donations upto 75% of your net US income reported on your Cdn return.

So if you report only $100 of net US income on your return, then you can only claim $75 of any US donations you make.

You can carry these forward if necessary upto 5 years.

There are some gifts that do not have such 75% restrictions (like gifts to your alma mater). There is a guide on this from CRA.

http://www.cra-arc.gc.ca/E/pub/tg/p113/README.html