Rental income from Canada

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sunflower101
Posts: 17
Joined: Sun Apr 03, 2016 4:56 pm

Rental income from Canada

Post by sunflower101 »

Hi,

I am doing rental income from Canada in following way.

For CRA:

1. Submit separate statement of Real estate rentals for me and my spouse.
2. Submit separate S216 both for me and my spouse.

For IRS:

1. 1040 joint
2. Separate Schedule C for me and my wife.
3. Long Schedule SE for me and Schedule SE for my spouse.
4. Combined 1116.
5. Separate 4562 (Depreciation of amortization) for me and my spouse.

- Am I doing these right?

- I just saw some ppl use Schedule E. But I dont use it. Is that a problem?

- Also, I see some posts saying foreign tax credit never going to be full amount that was paid in 216 to Canada. But my TAXACT provides full credit if I use all expense
related to the property ( Property tax, Management cost, insurance, utilities).
However, If I add CCA on top of that then foreign tax credit get reduced few hundred dollars. Am I supposed to add CCA to the foreign tax credit calculations?
nelsona
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Post by nelsona »

Just so we are clear, CCA refers to Cdn taxes, and DEPRECIATION refers to US taxes.

You must depreciate, you don't have to CCA (although you probably should for US taxpayers).

For 1116, all you need to include is the final NET income from your rental. There are no other expenses to claim if you have provided the NET amount.

Schedule E and C should suffice, not SE.
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sunflower101
Posts: 17
Joined: Sun Apr 03, 2016 4:56 pm

Post by sunflower101 »

Did you actually mean Schedule C OR Schedule E? Isn't by filling both Schedule C and Schedule E for the same Canadian rental property, I am declaring the same income twice?

Second question, when I use TAXACT for Schedule C it automatically creates Schedule SE in addition to Schedule C. Any idea why it is happening?

Thanks.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Post by nelsona »

Sorry. Yes, schedule E or C. In your case, since you are not in the rental 'business' you should use schedule E, and thus will not need schedule SE (which is used to calculate your self-employed social security tax -- which doesn't apply here)
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sunflower101
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Joined: Sun Apr 03, 2016 4:56 pm

Post by sunflower101 »

Last year we did sch C. This year will go for sch E.

Should we make two separate sch E or one combined will suffice?

Thanks again.
nelsona
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Post by nelsona »

Jointl Schedule E.

Particular reason your filed Sched C last year?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
sunflower101
Posts: 17
Joined: Sun Apr 03, 2016 4:56 pm

Post by sunflower101 »

Thanks!!

We thought either Schedule C or E is good. But now we understand Schedule E is the right way to go for our scenario.

Schedule E:

Landlords should use Schedule E if they rent rooms, apartments, buildings and provide only basic services to tenants.

Schedule C:

If landlords provide more than basic services to tenants like Housekeeping, maid service , meals etc.
nelsona
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Post by nelsona »

You might wish to fix last years, as it may save you some SE tax that you did not have to pay.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
sunflower101
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Joined: Sun Apr 03, 2016 4:56 pm

Post by sunflower101 »

Do we need to file amended return for last years with State too? Only related thing I find for NJ is:

"If the IRS changes the amount of your federal earned income credit, which changes your New Jersey Earned Income Tax Credit, you must file an amended New Jersey return."

Thanks.
nelsona
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Post by nelsona »

You eould need to file an amended NJ return if anything that affected it changed
Your SE tax would have changed and that is probaly an input tonyour NJ tax deductions
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smalhot05
Posts: 10
Joined: Wed Mar 14, 2018 1:08 am

Rental income

Post by smalhot05 »

If the NET rental income is Zero, then could you please advise if one has to still claim depreciation (on US tax return) and also file 1116?
nelsona
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Post by nelsona »

Yes, you always need to depreciate in US.
You only need to use form 1116 if you have foreign tax paid that you either want to use or carry forward.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
smalhot05
Posts: 10
Joined: Wed Mar 14, 2018 1:08 am

Rental income

Post by smalhot05 »

Thank you so much Nelsona for the response. Since I didnt claim depreciation in 2016 return, in my 2017 return, could I claim for 2016 and 2017 or would I need to file an amended return for 2016 for Georgia?

Thank you.
nelsona
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Post by nelsona »

Amend.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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