Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

Amend tax return due to Canadian income

Highlighted
Level 2

Need help client has income from Canada.  It was originally thought they did not have to file a Canadian return, however the company decided (after the return had been file to file a Canadian return.  Not sure how to amend.  Any help would be appreciated.

Labels (1)
0 Cheers
6 Replies 6
Highlighted
Level 15

US citizen? They have to report worldwide income on 1040. So amend to add that. They can get a credit for tax paid to Canada on the doubly taxed income. So add 1116.

But the devil is in the details. What kind of income is being taxed in Canada?


ex-AllStar
Highlighted
Level 2

regular  w-2 wages.  The client is a US citizen

0 Cheers
Highlighted
Level 15

Do you mean he traveled to Canada for business and he is liable for Canadian tax on his wages related to those workdays?  How much time did he spend in Canada?  What kind of business activities did he/project team engage in?  How were these costs ultimately borne, by the US employer or the Canadian entity?  Were there recharges and, if so, how were these structured?  These are some of the questions that need to be raised for treaty application purposes.

If your client was eligible for treaty exemption, he can't voluntarily pay Canadian tax and claim FTC on the US return.

Have seen it all too often, especially for smaller firms, that line managers or even senior management structuring these projects/transactions without engaging Corporate Tax, Finance, Compliance, HR, and external tax advisors on both sides of the border in advance or at all.  Getting these wrong without the proper structure and mitigation strategies could have serious tax, legal, regulatory consequences at not only the individual but also corporate level.

---------------------------------------------------------------------------------
Still an AllStar
0 Cheers
Highlighted
Level 11

The client is a "company"?  Is this a 1040, 1065, or 1120?

Highlighted
Level 15

Good question.


ex-AllStar
Highlighted
Level 2

The client is an individual.  Works for a US company portions of the income was earned in Canada.  The original return did not include the taxes paid to Canada because the company thought at first the employees would not have to file Canadian taxes.  The company had a firm in Canada complete the returns for the employees however now they must amend their original returns.

0 Cheers