lore

;);););););)

hi guys, it's been my headache in terms of the two countries tax returns. I dont know how to file the tax properly. someone told me filing US tax return first the get the foreign tax credit filled into the CA forms. it's exact the reverse way as you said above.

I will appreciate it if you would like to share info with me in respect of the US incoming tax return thing here in Quebec.

send message to me at ccievoice.han @ gmail.com.

merci !

woandlion

Hi lore,

Are you in Montreal now? I will come back to Montreal on Monday. Pls tell me your phone number to deng_shca@yahoo.ca. I will try to call you.

BL.TAX

1.Your wife can claim the US tax she paid as foreing credit with her Canada return, but she may not bring any tax she paid in Canada to US and claiming them as foreing tax credit as her income is US source. so, Q1 is not a question.

2. Probalbly not in your case. You choose resident for both countries, and I can't see any benefit from the treaty. Hope others can.

Post by woandlion
Thank BL.TAX for your comments. And thank Boooooooks for many helps.

I found making first-year choice and filing as a resident would be benefitful to me. 如果按resident 报税，仍然不能claim standard deduction because of my dual-status。但是we can claim child tax crdit, which will reduce $1000 directly from our tax.
在加拿大这边，因为有许多tuition credit，目前在联邦没有太多的balance owing，但是在quebec，必须交不少drug insurance。

所以现在我打算先在加拿大报税， 在美国先申请延期，然后make first-year choice, 等加拿大的foreign tax credit , 再按resident 报税。最后拿到美国的foreign tax credit 回加拿大做调整。最麻烦的报法！

有两个问题想请教：

1. 关于在加拿大的收入，如何从加拿大联邦和魁省得到foreign tax credit (用来在美国报税)？

2. 关于Canda-US treaty: may I get any benefit from Canda-US treaty?

Thanks.

woandlion

Thank you, BL.TAX.

For the first question, the problem is my income, which is all from Canada. How can I get those credits from Canada and Quebec in order to file my tax form in US?

Thanks again.

BL.TAX

Roughly, take Fed. tax payable (before foreign tax credit) less Quebec rabate on your T1  plus Quebec tax payable on your TP1 (Be aware-- your tax paid is not your balance owing)

To find the foreign credit is not a big problem. The problem is to find how much foreign credit you are allowed in your US retrun if you do it manually because you are filing jointly.

woandlion

Hi BL.TAX,

Sorry, I cannot understand. Could you explain that further? Thanks.

Richard 777

Foreign tax credit is benefit from US-Canadian treaty.  US tax law (Internal Revenue Code) never mentions the Foreign Tax Credit.  Only treaty mentions the FTC.  Treaty can override IRC in this case.  FTX is a treaty concept, not Code concept.

The total FTC will be used first by Federal until the Fedeal tax payable to zero, then the leftover can be used by Quebec.

Good Luck

BL.TAX

Could we set the technicals aside for a while?

I can't see too much benefits for you to file US return jointly.
If you pay a little of tax in Canada, your FTC will be a little, even less,  acoordingly. Why do you like to report your income in US? Even if jointly filing could lower the tax rate, but the total benefits may not be too much, probably negative. Are you sure you will get more benefit than what you pay?

If you don't mind, put your data here(besides, income, like tuition credit , daycare expense etc),  let's discuss with the numbers, that may be easier to go ( I guess the tuitionn fees matter in your case).

Post by woandlion
Hi BL.TAX,

Sorry, I cannot understand. Could you explain that further? Thanks.

woandlion

Thanks BL.TAX. Our main data are shown as following:

US source: (in US$)
Wife :
1. Form W-2
Box 1, 3, 5, and 16 wages =25760
Box 2 Federal income tax withheld =3510
Box 4 Social security tax withheld =1597
Box 6 Medicare tax withheld =370
Box 12a = C 28
Box 15 State =MA
Box 17 =1105

2. Form 1099
Interest income =22

3. Monving expense (only can be claimed in US) =3049

4. Total days in US =125

5. One 11-year old child.

Husband:
Income from US source =0

Canada source: (in CA$)

Wife:
Income from Canada source =0
Unused tuition fees (Quebec) =5750
Federal total available tuition amounts =14420

Husband:
Employment income =800
Other income (schollarship)=17500
Total tuition fees (Quebec) =6360
Federal total available tuition amounts =22135

Note:
1. We must file tax return as residents in Canada/Quebec and pay drug insurance since we did not return the rented apartment and cancel health insurance cards.

2. We may make first-year choice to file US tax as resident aliens.

3. US$/CA$ exchange rate =1.2116.

BL.TAX

Based on your data, I don't think you will pay any tax in Canada (except Quebec drug plan premium). Therefore, you have no FTC availabe for your US tax return. So, don't bother with your foreign tax credit any more.

Your wife might need a little FTC to reduce her Canadian tax. But, if your schoolarship is totally deductible in Quebec, she will need less.

Up to now, it may be a good strategy to reduce US tax as less as possible because US tax probably is her final tax. I guess that is why you would like to file joint return in US. But, you might not help too much by jointly filing because you wil include your incoem around 15,000 us$(if your schoolarship is not qualified to be excluded from Gross Income) . that will increase your tax payable by 300$= (15000-4000-5000-3200)*15%. 4000 for tuintion fee qualified only for jointly filing, 5000 for standard deduction (you have to make the full year election to be eligible), 3200 for exemption. your wife's tax will be reduced by 350$ because of lower rate for jointly filing. (25760-3049-5000-3200-7300)*(15%-10%)=350. You probably benefit for 50 bucks ( be aware what I calculated is just draft work, just to help you reasoning, do not take it as is)

other points for you:
- Check if your schoolarship is eligible to be excluded
- Be sure you and your kids has the SSN of US, otherwise, your claim for expemtion may be denied.
- Doube check full year election

Good luck!!