I am gearing up to start preparing my wife’s IRS return for 2012 – at least mentally, and I have a couple of questions regarding the T4, T4E and form 1040.
First, my wife is a US Citizen and PR of Canada, I am Canadian only and our two children are dual US/CAN Citizens with US SSN’s. My wife will be claiming them on her 1040 as dependents, and for the additional child tax credit using the new schedule 8812. We all live in Canada and all income is from Canada only.
She will be receiving a T4 for January 2012 to May 19 2012 for her income earned as a teacher.
Our second child was born in May 2012 and my wife went on maternity/parental leave starting May 20/12. As a result, she will be receiving a T4E to show income from EI Canada for the period from May 20 to December 31st, 2012.
When I fill out her 1040, can I group the income from the T4 and T4E together and show this on line 7 (wages) of the 1040?
Or, is the proper way, to show them as separate? Ie. Income from T4 goes on line 7 – wages, and income from T4E goes on line 19 – Unemployment compensation…..
I'm guessing it is to report them separately, but I just wanted to make sure.
Thanks!
Question regarding T4, T4E and form 1040
Moderator: Mark T Serbinski CA CPA
Hi - I don't know if this is correct, but I received parental leave a couple of years ago from the Quebec parental insurance plan (with this came a T4E slip and some other quebec slip). I reported it as "social security benefits" because I read somewhere that any foreign social security like benefit should be reported there. Again, I am not sure that this was correct. The IRS didn't complain though.
Regards.
Regards.
Thanks for the clarification nelsona!
This leads me to my next question regarding form 1116:
With T4 and T4E being considered both as general income, is it acceptable to use one f1116 with the T4 and T4E income grouped together, or, do I need separate f1116's?
Where would the $1200 universal child care benefit (UCCB) fit in? On the same gen limit f1116? I know that the UCCB is shown on line 21 of the 1040.
I'm trying to recall my wife's 2011 IRS return...When I filed it, I know I used one f1116 (gen inc.) to get the FTC for income shown on the T4 - she had no T4E for 2011.
I also used a separate f1116 (passive income) to get the FTC for a little bit of interest income that came from a bank savings account - this generated a T5.
However, I can't recall if I grouped the UCCB with the T4 general income f1116 or, if I used a separate f1116 with the general income box checked off for the UCCB..
I am currently out of town but I will have to check the file when I get home....
If separate forms are required that's fine, i am comfortable with apportioning the various types of income and tax. But, I'm sure the IRS doesn't want to have to deal with any more pieces of paper than what is required!
This leads me to my next question regarding form 1116:
With T4 and T4E being considered both as general income, is it acceptable to use one f1116 with the T4 and T4E income grouped together, or, do I need separate f1116's?
Where would the $1200 universal child care benefit (UCCB) fit in? On the same gen limit f1116? I know that the UCCB is shown on line 21 of the 1040.
I'm trying to recall my wife's 2011 IRS return...When I filed it, I know I used one f1116 (gen inc.) to get the FTC for income shown on the T4 - she had no T4E for 2011.
I also used a separate f1116 (passive income) to get the FTC for a little bit of interest income that came from a bank savings account - this generated a T5.
However, I can't recall if I grouped the UCCB with the T4 general income f1116 or, if I used a separate f1116 with the general income box checked off for the UCCB..
I am currently out of town but I will have to check the file when I get home....
If separate forms are required that's fine, i am comfortable with apportioning the various types of income and tax. But, I'm sure the IRS doesn't want to have to deal with any more pieces of paper than what is required!
Another question re f1116....
2012 is the second year I am using f1116 to file my wife's IRS return, 2011 was the first.
2011 I filed two 1116's, one for gen limit and one for passive limit, they each had unused foreign tax credits:
General limit f1116 line 14 - total amount of foreign taxes avail: $3517, line 21 - max amount of credit: $2695. Giving me an unused amount $822.
Passive limit f1116 line 14: $119, line 21: $91. Unused $28
These unused amounts were noted on separate "foreign tax credit carryover statement" worksheets, under the 2011 column. One worksheet for gen and one for pass.
1. Is there anything that needs to be done with these unused amounts from 2011 in terms of the 2012 f1116? Do they need to be shown anywhere on the 2012 form?
- I'm guessing no simply because her situation for 2012 is the same in that she will pay more tax in Canada then what is required in the USA.
2. 2012 will have it's own set of unused amounts for gen limit and passive limit. Do these get documented on the worksheet in the same manner as 2011 so that each year has its own separate unused credit amounts? I'm guessing this will be the case for future years as well....
The reason I ask is that although 2012 is the second time using f1116, 2011 was the first year with unused or excess credits. This will likely be the case for all future years because I can't see there being a case where her tax in Canada will be less than in the USA. So basically, these credits are documented and kept track of from year to year just in case there might be a year in the future where not enough tax was paid in Canada?
2012 is the second year I am using f1116 to file my wife's IRS return, 2011 was the first.
2011 I filed two 1116's, one for gen limit and one for passive limit, they each had unused foreign tax credits:
General limit f1116 line 14 - total amount of foreign taxes avail: $3517, line 21 - max amount of credit: $2695. Giving me an unused amount $822.
Passive limit f1116 line 14: $119, line 21: $91. Unused $28
These unused amounts were noted on separate "foreign tax credit carryover statement" worksheets, under the 2011 column. One worksheet for gen and one for pass.
1. Is there anything that needs to be done with these unused amounts from 2011 in terms of the 2012 f1116? Do they need to be shown anywhere on the 2012 form?
- I'm guessing no simply because her situation for 2012 is the same in that she will pay more tax in Canada then what is required in the USA.
2. 2012 will have it's own set of unused amounts for gen limit and passive limit. Do these get documented on the worksheet in the same manner as 2011 so that each year has its own separate unused credit amounts? I'm guessing this will be the case for future years as well....
The reason I ask is that although 2012 is the second time using f1116, 2011 was the first year with unused or excess credits. This will likely be the case for all future years because I can't see there being a case where her tax in Canada will be less than in the USA. So basically, these credits are documented and kept track of from year to year just in case there might be a year in the future where not enough tax was paid in Canada?
Genearlly the software should continue to carryforward the unused ammounts. They need not be split between spouses, if you are filing jointly.
The carryforward statement should accompany every year's return.
the problem of course with carry forward is that you can't use it until you have a year where you pay less foreign tax than you can use, so in ten years you wil begin losing the carryforwrds from last year, and so on.
You need to find some way of having a lower Cdn tax, perhaps with some Cdn-only deductions.
The carryforward statement should accompany every year's return.
the problem of course with carry forward is that you can't use it until you have a year where you pay less foreign tax than you can use, so in ten years you wil begin losing the carryforwrds from last year, and so on.
You need to find some way of having a lower Cdn tax, perhaps with some Cdn-only deductions.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks nelsona!
The only thing is that I didn't use software, I did it via paper and pencil, lol!
I did show everything to the CPA and they confirmed that it was done correctly by using whatever software they have. I thought this year I would do it completely on my own though. I can look into software...
I think the carry over statement from last year was included with the 2011 return even though that was the first year with unused credits...
My wife filed as HOA but would otherwise have the option of filing MFS. I don't think we will bother with MFJ at this point.
1. So...for 2012 would it be a matter of filling in the unused credit amount from 2011 on line 10 of the 2012 f1116 - carryback or carryover (attach detailed computation)?
2. The $822 unused from gen limit goes on the 2012 gen limit f1116, line 10 and the $22 unused from pass limit goes on the 2012 pass limit f1116, line 10.
I don't think there will ever be a year where she doesn't pay enough tax to CRA to get credit for the IRS but you never know..
The only thing is that I didn't use software, I did it via paper and pencil, lol!
I did show everything to the CPA and they confirmed that it was done correctly by using whatever software they have. I thought this year I would do it completely on my own though. I can look into software...
I think the carry over statement from last year was included with the 2011 return even though that was the first year with unused credits...
My wife filed as HOA but would otherwise have the option of filing MFS. I don't think we will bother with MFJ at this point.
1. So...for 2012 would it be a matter of filling in the unused credit amount from 2011 on line 10 of the 2012 f1116 - carryback or carryover (attach detailed computation)?
2. The $822 unused from gen limit goes on the 2012 gen limit f1116, line 10 and the $22 unused from pass limit goes on the 2012 pass limit f1116, line 10.
I don't think there will ever be a year where she doesn't pay enough tax to CRA to get credit for the IRS but you never know..