Reporting 401k contributions on T-1 line 104

ioio · Post by **ioio** » Wed Oct 31, 2012 10:10 pm

I am a Canadian citizen working in USA (commuting every day for work). CRA reviewed my 2011 income Tax Return and concluded that I need to include the amount from line 12a, code D of my W-2 slip (elective deferrals to a 401k plan) as part of my gross income (line 104 of my T-1). Is this a new regulation?

In the previous years, my accountants did not include the 401k in the gross income. Should I challenge the review? If yes, on what basis?

Thank you in advance for your answer.

nelsona · Post by **nelsona** » Thu Nov 01, 2012 6:36 am

You were ALWAYS required to report 401(k) contributions on line 104. This is clearly spelled out in the guide for the last dozen years or more

What HAS changed is that you are allowed to claim a deduction for your 401(k) contributions by filing an RC 268 form and taking the resulting deduction on line 207.

Looks like you got away with this in previous years (when the deduction was not permitted), so just fix 2011 by filing the form and claiming the deduction, and hope they don't go back more years. the deduction came about in 2009, so you should be safe.

nelsona · Post by **nelsona** » Thu Nov 01, 2012 6:38 am

The effect is to prevent you from also making RRSP contributions, which may be why CRA has flagged this years return.

JGCA · Post by **JGCA** » Thu Nov 01, 2012 6:43 pm

Also just remember your deduction you claim on line 207 is limited by your available RRSP cont limit, the fact that you commute is the reason why you are allowed this deduction otherwise its not available to everyone else.

nelsona · Post by **nelsona** » Thu Nov 01, 2012 8:57 pm

RC 268 determines the limit.

ioio · Post by **ioio** » Sat Nov 03, 2012 12:32 pm

Nelsona, JGCA thank you for your reply. I went back and checked with my accountants and realized that one of them did not know what she was doing!!! :(

nelsona · Post by **nelsona** » Sat Nov 03, 2012 12:34 pm

surprise, surprise, surprise....