401 k contributions for tax 2008

[dorins]

Sorry, wrong terminology. Yes, I used CAN taxes in Schedule A, which feeds as an itemized deduction on 1040 line 40a (for 2009).

However, I thought I can use a preliminary calculated CAN tax based on joint income. Once I finalize the 1040NR with the adjusted rate I go back to the CAN taxes and use foreign tax credits. Am I doing this right? I really haven't paid any tax in CAN yet, since both my wife and I are employed in the US.

[larry]

Can the traditional IRA be as deduction in canada tax return like 401K under the new treaty?

Thanks.

larry

[nelsona]

No. Only employer-sponsored plans can be deducted, by Cdn residents working in US.

Personal IRAs continue to be non-deductible.

Note that your 401(K) contributions impact your RRSP limit as well, and your RRSP limit affects how much 401(K) you can deduct. The effect is to prevent double dipping deductions in canada for both a 401(K) and an RRSP in excess of your RRSP limit.

See: http://www.cra-arc.gc.ca/E/pbg/tf/rc268/rc268-10e.pdf