I moved from Canada to the US effective April 30. I'm filing in both Canada and the US. Part of the job transfer was that the company would have my taxes done for me in both countries for the year in which I moved.
I just received my Canadian tax return to be filed, and they have included a portion of my US income. Technically I think this is correct, because I transferred on payroll effective March 16, and was paid by the US while still living in Canada for those 6-weeks while I was training my replacement.
I am trying to get the firm that did my taxes to call me to explain the number, but I have yet to hear from them. My question is, ahtough I have declared that I received income, can I not also declare that I have paid taxes to the US based on this income? If so, can that be used to off-set the amount of Canada tax that needs to be paid?
Basicaly, it looks like I made more money in Canada without paying any taxes (technically correct since I didn't pay taxes to Canada) but then I did pay that to the US. So it is not like I walked away with all of the income that they are claiming on my income taxes.
If this is correct, and I have to pay the taxes to Canada, then I am okay with this, so long as the income that I declared from the US on my Canada taxes does not get added to my US return. Unfortunately, the firm preparing my US taxes has filed an extension on my behalf with no other explanation.
I am continuing to follow-up with them for a response, but th=ought I would ask here if anyone has encountered this? I had though I had read somewhere (more than likely here) that you could declare that you paid taxes in the other Country (Canada/US) and that it would be accounted for accordingly. Perhaps there is an additional form that I need them to prepare on my behalf?
Any advice would be appreciated.
TIA
Filing in Canada and US, question on income
Moderator: Mark T Serbinski CA CPA
Where were you working for the 6 weeks?
If in canada, they have done your Cdn taxes correctly. The income is Cdn-sourced and is not eligible for any foreign tax credit.
If in US, they should be determining the portion of US tax that went to that income and taking credit for it.
For US, you will get credit for all Cdn taxes you paid, since they will likely file a full year 1040 and use either 2555 or 1116 to relive double tax.
I'm quite certain thety will do it incorrectly, as any good firm would give you all return at the same time. Which firm is doing this?
If in canada, they have done your Cdn taxes correctly. The income is Cdn-sourced and is not eligible for any foreign tax credit.
If in US, they should be determining the portion of US tax that went to that income and taking credit for it.
For US, you will get credit for all Cdn taxes you paid, since they will likely file a full year 1040 and use either 2555 or 1116 to relive double tax.
I'm quite certain thety will do it incorrectly, as any good firm would give you all return at the same time. Which firm is doing this?
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
Okay thanks. The work was done in Canada, and so I am okay with this. I guess I still figured that since I still paid some tax, it could be offset, but I guess it is offset in the US tax return.
The firm doing the taxes is one of the Big 3, It is just that the Canadian offices did the Canada taxes, and the US offices are doing the US ones. I'm sure they are talking to one another, but they have not been communicating with me, and so when you just get a return sent to you with no explanation, it is a bit frustrating.
I did hear back from them, and they said my US taxes would be submitted with a reduced amount. They did not mention the forms that you did here, so I will be sure to look for them. I'm still nervbous about the fact that I am awaiting for the US taxes to be done, and only hoping that with the extension and the hope that they will be done correctly that I will not be penalized, and will also get back the money from the US to cover what I owe to Canada.
The firm doing the taxes is one of the Big 3, It is just that the Canadian offices did the Canada taxes, and the US offices are doing the US ones. I'm sure they are talking to one another, but they have not been communicating with me, and so when you just get a return sent to you with no explanation, it is a bit frustrating.
I did hear back from them, and they said my US taxes would be submitted with a reduced amount. They did not mention the forms that you did here, so I will be sure to look for them. I'm still nervbous about the fact that I am awaiting for the US taxes to be done, and only hoping that with the extension and the hope that they will be done correctly that I will not be penalized, and will also get back the money from the US to cover what I owe to Canada.