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Level 2
March 30, 2024
Question

US Tax Credit for Multiple US Incomes

  • March 30, 2024
  • 1 reply
  • 9 views

Client had US employment income, US social security income and US investment income (in US).  Spouse had US social security income.  They filed joint US return.  When reporting foreign tax paid, I prorated the 1040 amount between the 4 incomes.  Then added W-2 boxes 4 & 6 to the employment part.  They now don't get to claim FTC for tax allocated to US social security.  Does this seem correct?

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1 reply

Level 7
April 2, 2024

You cannot claim US tax paid on US Social Security if your clients are Canadian residents.  If a person is a permanent resident in Canada, the US Canada Tax Convention states that US Social Security (and Canadian CPP and OAS) is only taxable in Canada.  If a person is a permanent resident in the US, the US Social Security (and Canadian CPP and OAS) is only taxable in the US.  Their US tax return should be amended and they should not be reporting the Social Security on the US tax return.