Form 1116 - real estate immigration income tax expert

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.
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