Hi Everyone,
Long time lurker - first time posting. I really appreciate all of the helpful comments and advice offered on this forum (Nelsona especially!).
I work/live in Canada but have US PR status. I have used FTC 1116 in past and never owed any US Fed or MASS State taxes. However this year I am showing amounts owing to US. I believe it is due to RRSP contributions as 2017 was my first year contributing. Two questions:
1. On 1116: do I report income tax deducted from my pay (higher value) or the income tax shown after refunds on my Notice of Assessment (lower value)? I have seen some posters recommending to only use information from T4, not notice of assessment.
2. Is showing a negative number (same value of RRSP contribution) under Line 21 the only way to reduce US taxable income? As I would like to maintain PR status, I would prefer to avoid using treaty.
Would greatly appreciate any help - thanks in advance!
H
RRSP Contribution / Taxable Income Reduction?
Moderator: Mark T Serbinski CA CPA
First off, why would MA taxes be a concern? Only income from work or property held in MA is taxable there. You don't live there.
I do not recommend spoofing a residence in US. And that doesn't solve any GC problems.
1. The foreign taxes you can claim as credit on 1116 can be either paid or accrued. However if you choose PAID taxes (ie, what was withheld) and you get any refund from CRA, you need to amend the 1116 and your 1040. So I NEVER recommend using your withheld tax, so I don't know where you would see this advice. Use the tax that is determined on your actual tax return.
RRSP contributions are only deductible on 1040 if made through an employer plan. Personal RRSP contribs are NOT deductible.
If you ARE making such a contribution through work, then the method for deducting is to reduce your taxable wages by the amount (limited to the current 401(k) contribution limit) and advising on a form 8833.
While I sense that you are not abiding by the terms of your green card, (which is a whole other topic), the deductibility of RRSP contributions made through work is NOT based on residence, it is solely based on working for a Cdn employer, so you should not fear using the treaty.
What do you say when you cross the border as to where you live?
I do not recommend spoofing a residence in US. And that doesn't solve any GC problems.
1. The foreign taxes you can claim as credit on 1116 can be either paid or accrued. However if you choose PAID taxes (ie, what was withheld) and you get any refund from CRA, you need to amend the 1116 and your 1040. So I NEVER recommend using your withheld tax, so I don't know where you would see this advice. Use the tax that is determined on your actual tax return.
RRSP contributions are only deductible on 1040 if made through an employer plan. Personal RRSP contribs are NOT deductible.
If you ARE making such a contribution through work, then the method for deducting is to reduce your taxable wages by the amount (limited to the current 401(k) contribution limit) and advising on a form 8833.
While I sense that you are not abiding by the terms of your green card, (which is a whole other topic), the deductibility of RRSP contributions made through work is NOT based on residence, it is solely based on working for a Cdn employer, so you should not fear using the treaty.
What do you say when you cross the border as to where you live?
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 for the response!
Will use tax paid from Notice of Assessment then.
I am making the contribution through work, so fortunately it can be used. However, now I need to figure out how to fill out 8833 lol.
Long story short, I am planning to move back to the states. Graduated recently in Canada and was easier to find an employer in the same city.
Regarding state taxes - I thought I needed to file to be tax compliant? I only had $300 worth of dividends and $50 capital gain so I was surprised to see that I owed money.
Will use tax paid from Notice of Assessment then.
I am making the contribution through work, so fortunately it can be used. However, now I need to figure out how to fill out 8833 lol.
Long story short, I am planning to move back to the states. Graduated recently in Canada and was easier to find an employer in the same city.
Regarding state taxes - I thought I needed to file to be tax compliant? I only had $300 worth of dividends and $50 capital gain so I was surprised to see that I owed money.
So how many years have you been living in Canada with a Green Card? Most can only get a way with 1-2 years, before border catches them.
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