Wife & I have lived in the US since March 2012. We spent all of 2013 living in the US and I was expecting to file only US returns this year, but she just received a T4 from Canada for around $1,000 in income. She did not actually work during 2013 & this appears to have been maternity leave benefits from her last job in Canada.
For 2013, would I simply file a Canadian NR return for her alone, then add the income from the T4 to our US return as foreign income? I fired up TurboTax and completed a NR return for her and it's saying she's owed around $111 refund. She paid $74 in CDN taxes, $21 in CPP, $14 in EI... so it looks like she ends up getting all that refunded.
Does this sound accurate? I don't need to file an NR return for myself as well do I? I had no income at all from Canada in 2013... 2012 we filed an exit return to Canada.
Thanks.
Non-Resident Tax Return for Canada
Moderator: Mark T Serbinski CA CPA
It's actually better than that. This is considered wages, and since the wages are less than $10K, she can and should sxclude the amount on line 256. This will get her all her withholding plus EI and CPP back.
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My wife (and I) are in a very similar situation. We moved to the US in 2012 and she had remaining maternity benefits in 2013. She had $9215 in benefits and 25% non-resident withholding tax.
However we didn't use line 256 to exclude the amount. We filed her as a non-resident electing under section 217 and was able to claim full personal deduction (no other world income) and got all of the withholding tax back.
I was not aware of the line 256 deduction ... I do see this in the non-resident guide for line 256:
[i]Non-residents and non-residents electing under
section 217 – You can claim a deduction for Canadian-source income you reported on your return if it is tax-free in Canada because of a tax treaty. If you do not know whether any part of the foreign income is tax free, contact us.[/i]
I am curious - is non-resident income < $10,000 (as per your response) tax-free because of the treaty something? I don't see that anywhere. Under what rule is the OP allowed to deduct the full amount on line 256?
However we didn't use line 256 to exclude the amount. We filed her as a non-resident electing under section 217 and was able to claim full personal deduction (no other world income) and got all of the withholding tax back.
I was not aware of the line 256 deduction ... I do see this in the non-resident guide for line 256:
[i]Non-residents and non-residents electing under
section 217 – You can claim a deduction for Canadian-source income you reported on your return if it is tax-free in Canada because of a tax treaty. If you do not know whether any part of the foreign income is tax free, contact us.[/i]
I am curious - is non-resident income < $10,000 (as per your response) tax-free because of the treaty something? I don't see that anywhere. Under what rule is the OP allowed to deduct the full amount on line 256?
I guess you must be using the $10,000 rule in the Tax Treaty for employment income in the other country (Canada) ... interesting.
I guess this method is "better" than section 217 for income < $10k because it doesn't matter how much other money one earned in their resident country (the US in this case). Section 217 only worked well for my wife because she didn't have any other world income and could thus qualify for full deductions.
I guess this method is "better" than section 217 for income < $10k because it doesn't matter how much other money one earned in their resident country (the US in this case). Section 217 only worked well for my wife because she didn't have any other world income and could thus qualify for full deductions.
Hold on. Maternity benefits paid by the employer are considered wages under the treaty, and are subject to the treaty exclusion. Look at the employment clause XV(2).
Mat benefits paid by Govt are not wages, and are subject either to flat tax or can be recalculated using a 217 election.
Mat benefits paid by Govt are not wages, and are subject either to flat tax or can be recalculated using a 217 election.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Non-Resident Tax Return for Canada
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