calculation and disclosure of foreign employement income T1

chansell · Post by **chansell** » Sat Jun 07, 2008 4:16 pm

I moved to the US from Quebec at the end of February 2007. I earned employment income in the US. My wife and child moved to the US once our house sold in August 2007. CRA sent me a letter notifying me that they consider me to be a non-resident of Canada as of March 28th 2007 (I was expecting it to be August 23, 2007 the date my family left to join me in the US). When I file my Canadian return should I include as foreign employment income to be the amount of employment income earned from 02/07 ->3/28/07 (approx 60 days), calculated as follows:

(Taxable foreign employment income/365) * 60

(Corresponding tax credit will use same proration)

Do I have to show the calculation somewhere on my T1 so that it can be reconciled to my 1040 which will be attached?

Thanks for the help.

nelsona · Post by **nelsona** » Sat Jun 07, 2008 8:24 pm

Your method is one way: of course whrre you wrote 365, you should only use is soemthing like 330 days since you were not employed in US in januarry.

A better way is to simply use your paystubs from Feb and March for the gross (and FICA). and that percentage for the US and state tax.

chansell · Post by **chansell** » Tue Jun 10, 2008 11:28 am

I am going to see whether it is worthwhile filing MFJ. My wife only had
income from her employment in Canada while we were residents there. If
we take the election to treat my wife as a US resident (in order to be able to file
our return MFJ) does her Canadian income also get reported on the state
income tax return? Or does it only get reported on the 1040?

thanks.

nelsona · Post by **nelsona** » Tue Jun 10, 2008 11:38 am

Filing MFJ, which means full-year US resident, does NOT mean you will have to be full-year resident of any state. She will report any income to the state (as will you) as a part-year resident, which typically means all income after moving to that state.

nelsona · Post by **nelsona** » Tue Jun 10, 2008 12:23 pm

Your employment income will be reported to the state, regardless of how you file federally, since the work was performed in that state.

chansell · Post by **chansell** » Tue Jun 10, 2008 1:55 pm

Actually I am referring to my wifes employment income that she earned in Canada. She worked in Canada not in the US. If we want to elect to deem her a resident for tax purposes in the US (so we can file MFJ) we need to report her worldwide income on our 1040. Does that Canadian source income also have to be reported on the state return?

nelsona · Post by **nelsona** » Tue Jun 10, 2008 2:10 pm

I think I answered you original question (please reread it), I merely expanded on it, to remiond you that YOUR state tax return should only include income for your US job, and any other income thta YOU eaned aftere moving to that state.

Did she move to US while she still worked in canada. I'm assuming not

chansell · Post by **chansell** » Tue Jun 10, 2008 5:44 pm

That is why this is a particularly weird situation. CRA sent me a letter stating that they deemed me a non-resident of Canada as of 3/28/07 (even though my wife & Child had not left the country yet and she was still working in Canada). She earned wages in Canada until 07/07 and then she received maternity benefits for the remainder of the year. She joined me in USA on 8/23/07 after the house was sold. If we take the election to file MFJ do we have to include her worldwide income for the entire year on the state return (California) in addition to the 1040?

nelsona · Post by **nelsona** » Tue Jun 10, 2008 7:35 pm

Look. I have answered your question twice if not more often already. Your story about what CRA said doesn't matter.