How to report Canadian Maternity Benefits

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mufasa
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Joined: Sat Feb 09, 2019 3:29 pm

How to report Canadian Maternity Benefits

Post by mufasa » Sat Feb 09, 2019 3:51 pm

My wife and I moved to the US on Nov 2017 on H1b and H4.
We are resident aliens in the US for tax purposes in 2018.

Filed departure returns in Canada for both of us in 2017.
My wife had maternity benefits income in 2018 that was paid out by Service Canada and we have a T4E for that purpose. She paid close to 2.7k CAD in taxes.

Question is how do we report this income in the US tax (1040). Does this go under Other Income?

I was also playing around with some online free tax tools, and when I select Non Resident and enter the T4E info on a canadian tax return, it seemed to indicate that all the tax paid in Canada is refundable. Does that seems right?
According to CRA, non-residents are liable for Part I and Part XIII and EI benefits does not seems to fall under either category.
https://www.canada.ca/en/revenue-agency ... l#txblgtns

Should we file Canadian Tax return first and then file the US return to see how much tax we are required to pay and report accurately on foreign tax credit?

Also we have a couple of savings accounts in Canada and they didnt generate a T5 (likely because total interest was less than 50$). Do we need to add up the cents and report it on the US return?

mufasa
Posts: 4
Joined: Sat Feb 09, 2019 3:29 pm

Re: How to report Canadian Maternity Benefits

Post by mufasa » Tue Feb 19, 2019 1:39 pm

Bumping this to get some eyeballs.

My main query is what line to report the maternity income in the US tax return.

MGeorge
Posts: 299
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Location: Canada

Re: How to report Canadian Maternity Benefits

Post by MGeorge » Tue Feb 19, 2019 1:49 pm

My understanding is that these types of benefits fall under the category of "unemployment compensation" line 19.
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MGeorge is neither an accounting nor taxation professional.

mufasa
Posts: 4
Joined: Sat Feb 09, 2019 3:29 pm

Re: How to report Canadian Maternity Benefits

Post by mufasa » Thu Feb 21, 2019 1:36 pm

MGeorge wrote:
> My understanding is that these types of benefits fall under the category of
> "unemployment compensation" line 19.

Thanks for the reply.
I will go forward with a Canadian tax return first to get the final value of the tax that we are liable to Canada and then use that as Foreign tax credit in US.

nelsona
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Re: How to report Canadian Maternity Benefits

Post by nelsona » Fri Feb 22, 2019 2:12 pm

The mat benefits received AFTER departure are NOT to be included on a Cdn tax return. Did you mention to them that you had moved to US? If you did, they should have withheld 25% flat tax and issued your an NR4 form, which is what you will use on your 1116 in US. You will need to send a letter to CRA, to pay/get refund if EXACTLY 25% was not withheld.

It is UI, as MGeorge said, for your 1040, general limitation for 1116.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
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Re: How to report Canadian Maternity Benefits

Post by nelsona » Fri Feb 22, 2019 2:13 pm

There is no Cdn return for you to file in 2018.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

mufasa
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Joined: Sat Feb 09, 2019 3:29 pm

Re: How to report Canadian Maternity Benefits

Post by mufasa » Fri Feb 22, 2019 6:20 pm

nelsona wrote:
> The mat benefits received AFTER departure are NOT to be included on a Cdn
> tax return. Did you mention to them that you had moved to US? If you did,
> they should have withheld 25% flat tax and issued your an NR4 form, which
> is what you will use on your 1116 in US. You will need to send a letter to
> CRA, to pay/get refund if EXACTLY 25% was not withheld.
>
> It is UI, as MGeorge said, for your 1040, general limitation for 1116.

My wife was issued a T4E. I do remember calling Service Canada at some point in 2018 although I do not believe the tax rate was discussed. They did not deduct 25%.
Would filing a tax return not automatically fix this by them returning a Tax Owing letter?

nelsona
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Re: How to report Canadian Maternity Benefits

Post by nelsona » Sat Feb 23, 2019 6:03 pm

No.
This income is not reported of taxed on a Tax return. This needs to be corrected separately. You have nothing to file in Canada for 2018.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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