? US child tax credit - Canada Taxation

T

Topaz7

New Member
I posted this Q on an other site a week ago, but no responses yet.
Checking to see if someone can clarify this, on this forum. Tks.
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I work in the US & towards 2005 tax returns, I am supposed to get US$ 660 return from US federal. But since I have 2 kids, I got an additional US$ 2000 from US federal ($1000 child tax credit for one kid)

Based on my reported US income, I would be paying CA$ 2155 to Canada.
But, now the Canadian tax consultant that I am working with, is saying that, on top of paying $2155, I have to REMIT the tax credit (US$ 2000 in total) that I received from US federal to CCRA.

That makes it to: CA$ 2155 + (US$ 2000 (x 1.2116)) = CA$ 4578

I am not aware of this, that It sounds so outrageous. (My thought is that, the refund I received from the US, would be added towards the gross income when reporting to CCRA, that enables me to pay 2155 + little more)

Could someone please clarify the above.........OR provide professional help to prepare my 2005 Canadian taxes (on US income)?
(I am willing to pay any charges). Thanks.
 
I think your tax consultant is wrong. The tax credit from the US govt does not change your taxable income on the US tax return, does it? If not, you will not have to pay anything to CCRA for that child credit from the US. Because you are already paying the CCRA the tax based on your US taxable income. If that changes, you pay CCRA something based on your change. If that does not change, why do you have to pay anything? Do you consider any refund/credit from the CCRA as taxable for the next tax year? The answer is NO. Then why consider this?

This is my (logical) viewpoint. You might want to consider consulting another (good) accountant..


Topaz7 said:
I posted this Q on an other site a week ago, but no responses yet.
Checking to see if someone can clarify this, on this forum. Tks.
-------------------------------------------------------------------------
I work in the US & towards 2005 tax returns, I am supposed to get US$ 660 return from US federal. But since I have 2 kids, I got an additional US$ 2000 from US federal ($1000 child tax credit for one kid)

Based on my reported US income, I would be paying CA$ 2155 to Canada.
But, now the Canadian tax consultant that I am working with, is saying that, on top of paying $2155, I have to REMIT the tax credit (US$ 2000 in total) that I received from US federal to CCRA.

That makes it to: CA$ 2155 + (US$ 2000 (x 1.2116)) = CA$ 4578

I am not aware of this, that It sounds so outrageous. (My thought is that, the refund I received from the US, would be added towards the gross income when reporting to CCRA, that enables me to pay 2155 + little more)

Could someone please clarify the above.........OR provide professional help to prepare my 2005 Canadian taxes (on US income)?
(I am willing to pay any charges). Thanks.
Click to expand...
 
Hi bigboy,

Your viewpoint sounds very logical.
Yes, nothing is changing. I am trying to pay CCRA only based on US taxable income & not considering any refund/credit for next year.

How ever, I tried to convince my tax consultant stating that ‘US child tax credit is NOT taxable income in Canada’, but he still trying to explain me a point, which I don’t understand. So, I requested him to send me my tax forms that he filled-in. I am expecting to get them by Monday. I will verify and get back here, if I have any more questions.

Thanks for responding!
 
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