Level 5

Question

US Citizen residing in Canada received Unemployment Benefits

Forum|Forum|4 years ago
September 20, 2021
2 replies
24 views

US Citizen living and working in Canada. She received Unemployment Insurance benefits from Canada. Would you report this in the usual place? I don't see anything which would suggest that it doesn't qualify for the 2020 exclusion.

Lacerte Tax

This topic has been closed for replies.

BobKamman

Level 15

How about looking at the law?

Code Section 85 "(b)Unemployment compensation defined

For purposes of this section, the term “unemployment compensation” means any amount received under a law of the United States or of a State which is in the nature of unemployment compensation."

willatbirdAuthor

Level 5

Nice of you to be so snide about it. I obviously looked in the wrong place. Hope your day gets better.

BobKamman

Level 15

Having said all that, we should remember what is the Supreme Law of the Land. Most people in the United States will say it is the Constitution, but of course they will be wrong. Tax treaties can overrule the Constitution. And we have a tax treaty with Canada. Of course there is some debate about whether tax treaties are "real" treaties that permit the Constitution to be ignored.

Article 22 of the US-Canada tax treaty says,

"Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State, except that if such income arises in the other Contracting State it may also be taxed in that other State."

So does that apply to unemployment compensation? That would mean your question isn't about the $10,200 exclusion, but an exemption of the total amount even if more than that.

There's an interesting Tax Court case from 2017, in which IRS argued that unemploymnent was indeed "other income" under Article 22, when it involved a Canadian collecting U.S. unemployment.

https://www.parkertaxpublishing.com/public/tax-treaty-canada.html

joshuabarksatlcs

Level 9

Bob:

Below is an excerpt from an article titled What Happens if H.R. 1 Conflicts with U.S. Tax Treaties?
by Erika K. Lunder, Legislative Attorney, for the Congressional Research Service, dated December 19, 2017.

I found it on the internet. If it is on the internet, of course it's correct....

” The U.S. Constitution provides that the Constitution, acts of Congress, and treaties are 'the supreme Law of the Land . . . .' When the Constitution conflicts with a federal law or treaty, the Supreme Court has held that the Constitution is controlling...."

Now, bear in mind I'm NOT an attorney. Nor am I interested in researching further, beyond the freebie I got from the internet. If I were to research further, I would go straight to the horse's mouth, i.e. the constitution, Constitution Annotated, and then the related explanations and/or case law.

For tax research, what better horse's mouth than IRC and the regs? That was how I learned it from way back when. In fact, I was drafting a response about how Section 9042 of the American Rescue Plan Act of 2021 referred to Section 85 of the IRC, and how the exclusion was added as Section 85(c). I got to the part of "also check the treaty" when I saw the subsequent posts, and decided NOT to post mine. Had I posted it, I would have been a Snide Bother of your...

Anyway, short story long, Bob, I disagree with you on you saying, that Treaties are the Law of the Land. To me, conceptually, treaties are binding agreements between the U.S. and the signing countries. The power to sign the treaties is a function co-handled by the three (mostly two) branches, and should still be subject to the Constitution. Imagine a crazy situation when a treaty traded away our basic rights. I don't think the Constitution would allow it. But then, conceptually.

Just my 1.8 cents. (Used to be 2 cents, before the market opened today.)

I come here for kudos and IRonMaN's jokes.

joshuabarksatlcs

Level 9

Posted while editing.... Of course it should say:

...., I would have been a Snide Brother of yours...

Anyway, short story long, Bob, I disagree with you on your saying,.....

I come here for kudos and IRonMaN's jokes.

Sign up

Login with SSO

Let's get you signed in

Login with SSO