Hi Everyone,
I have a question regarding Foreign Tax Credits and how to fill out forms T2209 and T2036. Note I am a Canadian Citizen working in the US but living in Canada.
I always have an accountant file my taxes, but recently I was notified that this form may be filled out incorrectly by a colleague.
What is the proper formula for Line 431 on the T2209? Is it:
Method 1) Line 431 = (Federal Taxes Owed for the year) + (State Taxes Owed for the year)
OR
Method 2) Line 431 = (Federal Taxes Owed for the year) + (State Taxes Owed for the year) + (Social Security Paid) + (Medicare Paid)
My accountant used method 1 and applied Social Security as RRSP contributions and left out Medicare entirely. This would reduce taxable income instead of being converted to tax credits (thus raising what I would owe in Canada vs method 2).
Thanks in advance for the help.
Foreign Tax Credits
Moderator: Mark T Serbinski CA CPA
Re: Foreign Tax Credits
Your accountant was incorrect. FICA taxes (both SS and Medicare) are foreign taxes eligible for foreign tax credit, and have nothing to do with pension, RRSP, etc.
A tax credit would always be better than a deduction in any event.
A tax credit would always be better than a deduction in any event.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
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Re: Foreign Tax Credits
Thanks nelsona, greatly appreciated.