Filed in Canada... they shorted our return

cantex2012 · Post by **cantex2012** » Wed May 22, 2013 12:17 am

We just received or return back from Canada. They said basically because we didn't report all of our world income for 2012, they didn't allow our deductions (CRA rep said we didn't need to when they called us asking for more information). We were not in Canada for all of 2012, nor did we own a home etc. We left late december 2011 and the income that was made in Canada was commission owed from 2011 but hadn't been paid out until 2012 (company pays commission once they are paid... they didn't get paid until 2012 for some sales that took place in 2011). Not sure if there is any other pertinent information. We would like to get our money back (gave us 1K vs. 5K) from CRA but not sure if we should report our income here in the USA and risk getting a hefting bill from CRA. Any advice would be greatly appreciated!! Thank you.

nelsona · Post by **nelsona** » Wed May 22, 2013 8:44 am

You are a non-resident of Canada, so you are not entitled to deductions. You do not report world income, which is the whole point of being non-resident.

When you filed your 2011 return, I assume you put a departure dtae on your return, correct?

Now, if the amount you recieved from your employer was less than $10K, you are allowed to exempt that income by treaty (you would put the amount on line 256. But if it was more than 10K, you must report and pay tax on it, and your return was handled by CRA correctly.

Now, of cousre, since you must also report this income on your US return (you did this, right?), if you do owe more Cdn tax you now have a bigger Cdn tax to use as a credit on your US return.

Just another point. You keep saying "we" got paid. Surely, only one of you made this income, no?

cantex2012 · Post by **cantex2012** » Wed May 22, 2013 11:00 am

Thank you for the reply. I state "we" as we consider it "our" money. Of course one only actually earned it ;).

nelsona · Post by **nelsona** » Wed May 22, 2013 11:19 am

Correct, madam.

cantex2012 · Post by **cantex2012** » Wed May 22, 2013 11:42 am

Called CRA and they confirmed this, aren't eligible for deductions. It just really bugs me as it was commission owed from 2011 when we were residents. They other part that irks me is that the income was taxed in the highest possible tax bracket when the amount earned would have fallen into one of the lowest brackets if not the lowest? It just doesn't make sense to me... I guess the government can really just do whatever they want ;).

nelsona · Post by **nelsona** » Wed May 22, 2013 11:49 am

The government can indeed tax as they please, but they did not do this capriciously; that is the law.

But, realisticly, had this income been paid to you in 2011, it would have been taxed at a higher rate that it was in 2012, by the simple fact that in 2012, you had already earned more than your deductions, so it would have been taxed at your marginal rate, which would have been at least as high as it was in 2012, if not higher.

So, now you need to amend your US return to get credit for the Cdn tax against the US tax that you owed for this income (you didn't say whether you reported it or not on your US tax return as you should since you reside in US).