HST credit?

[alexf]

Hi, I am hoping for some input re: HST. I am going to be starting a job that will require me to remit HST on my pay. Is HST remitted to the Canadian government counted as tax on income for US tax purposes, or am I going to wind up being double-taxed by having to report the full 100% of my Canadian income to the US rather than 13% less, after the HST has been paid?

[Fricenaz]

Hey! I’ve been in a similar situation before. You’ll report the full amount of your Canadian income on your US taxes, but you can use IRS Form 1116 to claim a credit for the HST you paid. It’s a bit of a process, but it helps prevent double taxation.

[nelsona]

It is debatable whether HST is an allowable tax covered by the Treaty, since it is not "income tax". HST would have to be defined in the Income tax Act to be eligible.

Regardless, if a US taxpayer is reporting their Cdn income on a 1040 and using foreign tax credit with Form 1116, their Cdn and provincial income tax, EI and CPP premium will more than cover the US tax, so adding questionable HST to the 1116 won't change anything.

alexf, shouldn't you be using foreign earned income exclusion, Form 2555?