My_question_is: Applicable to both US and Canada Subject: Form 1116 Expert: taxman at centa.com Date: Monday March 28, 2005 Time: 06:38 AM -0800 QUESTION: Hi David, I always have used your opinion as you are the voice of reason in all this chaos! I am a US citizen and a permanent resident in Canada and I am trying to do my taxes for 2004. I am filing a 1040 and 2555 and they seem straight forward, the tricky part is the 1116 Form. All of my income is foreign sourced (ie, earned in Canada) except for 10,000 which was earned in the states but still taxed in Canada. I know I shouldn't be double-taxed but I don't understand how to fill out form 1116 so that I can get a credit for the 10,000 dollars. On the 1040 form, the US wants to tax that money too. I have tried the IRS (no answer on their phone), and H&R in Canada and they are stumped. Thanks for your help!!! Jxxxxxxx ------------------------------------------------- david ingram replies: the 1116 does not apply to the $10,000. Except for the unusual situation where income is resourced according to a tax treaty, the 1116 applies to tax paid to Canada or another country on the money earned there. In this case you pay the tax to the US and then claim credit for the tax (including Medicare and social security) paid to the US on schedule 1 of your Canadian return on lines 431 and 433. You would also put the same amounts on the provincial 428 form for your province. Answers to this and other similar questions can be obtained free on Air every Sunday morning. Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth Management and I, David Ingram host a LIVE talk show called "ITS YOUR MONEY" Those outside of the Lower Mainland will be able to listen on the internet at www.600AM.com <http://www.600am.com/> Local calls are taken at (604) 280-0600 and Long Distance calls (BC only) are taken at 1( 866) 778-0600 Callers to the show are invited to attend free seminars on financial planning with such specialities as deductible mortgage interest. They are held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604) 731-8900 for more information. ========================================= This from "ask an income tax and immigration expert" from www.centa.com <http://www.centa.com/> or www.jurock.com <http://www.jurock.com/> or www.featureweb.com <http://www.featureweb.com/> . 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