# CRA has denied my Foreign Tax Credit, getting double taxed on US income



## mrcheap (Apr 4, 2009)

I worked in the US in 2013, 2014 and 2015. In 2013 they requested documentation to support my foreign tax credit, which I provided and everything was fine.

In 2015 I earned $52,304.66 and paid $12,142 in state and US federal taxes on this. My Canadian taxes should have been around $14,111 - it was a little higher due to Canadian investment income, but then I made contributions to my RRSP such that I only owed $650 to Ontario.

CRA asked for documentation about the tax credit and I sent them everything they requested. They've now assessed me an additional $12,340.82.

It *SEEMS* like they're refusing to give me credit for the US taxes I paid - the sum they're requesting is roughly equal to the tax credit I should have gotten. In the explanation they said "We gave you a federal foreign tax credit of $1,252.92 based on the information we have." It should have been FAR higher than this.

In 2015 I got married (to an American woman) and filed a joint US return which may be complicating things. 

What should my next step be:

1) Contact CRA and ask them what I can provide them with to convince them I paid US taxes? Perhaps refiling our US taxes separately or get a tax transcript from the IRS.

2) Get help from a cross border tax specialist? I have no idea how to pick who to hire for this. Also, I have no idea what sort of charges there would be - I don't want to pay $15k to fight paying $12,340.

3) Something else?

Thanks in advance for any advice.

EDIT: UPDATE Called them, turns out they just want me to get transcripts (instead of the return I submitted) and send that to them.


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## kcowan (Jul 1, 2010)

I would file a Notice of Objection. That will get you special attention. It will also suspend any interest and penalty charges until resolved. I just did this for 2015 because I did not receive their reasons in the mail (returned to them by Canada Post). Not resolved yet although they have acknowledged that I am right.


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## mrcheap (Apr 4, 2009)

That was going to be my next step, but I wasn't sure if I should do it myself or hire someone to.

You were comfortable doing it yourself?


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## Eclectic12 (Oct 20, 2010)

mrcheap said:


> ... In 2015 I earned $52,304.66 and paid $12,142 in state and US federal taxes on this. My Canadian taxes should have been around $14,111 - it was a little higher due to Canadian investment income, but then I made contributions to my RRSP such that I only owed $650 to Ontario ...


It sounds like you have Canadian accounts ... assuming they meet the threshold, are you filing the FATCA mandated Foreign Bank Account Reports, like others working in the US are reporting they are?
http://canadianmoneyforum.com/showthread.php/20754-FATCA-new-US-tax-law
http://canadianmoneyforum.com/archive/index.php/t-16629.html




mrcheap said:


> ...EDIT: UPDATE Called them, turns out they just want me to get transcripts (instead of the return I submitted) and send that to them.


I'm not planning on working in the USA again anytime soon ... but just in case, what is a "transcript"?


Cheers


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## mrcheap (Apr 4, 2009)

Eclectic12 said:


> I'm not planning on working in the USA again anytime soon ... but just in case, what is a "transcript"?


It's basically equivalent to the assessments we get from CRA (the IRS doesn't provide any such thing unless it's requested): https://www.irs.gov/uac/newsroom/how-to-get-a-transcript-or-copy-of-a-prior-year-tax-return


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## kcowan (Jul 1, 2010)

mrcheap said:


> That was going to be my next step, but I wasn't sure if I should do it myself or hire someone to.
> 
> You were comfortable doing it yourself?


Yes I have always done it myself. You can do it online in MyCRA now. Always had a positive outcome too.


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## james4beach (Nov 15, 2012)

I see the OP updated their post with what was going to be my suggestion.

The IRS provides what they call a "transcript" which is a summary of your US taxes and account payments. This is what the CRA wants to see, as proof that you filed AND paid your US tax obligation.

When the CRA asks you to provide supporting documents for a big US FTC, you should provide a copy of your IRS transcript. These are easily obtained from IRS, I already got mine for 2015 taxes.


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## james4beach (Nov 15, 2012)

mrcheap: I'm curious, when did CRA send you a letter and ask you to support your 2015 foreign tax credit? I also filed with a big FTC and haven't seen anything from CRA yet but expect them to ask me.


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## torontomeet1 (Sep 27, 2016)

*Tax Credit*

Hi, going through this process right now. Does anyone have a an approximate time in which this is resolved once you have submitted all necessary documents, such as the transcripts. 

Also, do you need to call to have them review the documents something in the letter they sent me describes an "adjustment letter". 

So far I have just uploaded everything online through MyCRA. 

Any info on how this was resolved would be great thanks.


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## AltaRed (Jun 8, 2009)

Don't know what is happening for 'regular' tax returns in terms of re-assessments, but I was told recently in a query about a 'Final T1' in the Estate dept that their backlog for re-assessments from time of receipt of request is 22 weeks and climbing.


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## Nerd Investor (Nov 3, 2015)

Transcript was going to be my suggestion as well. CRA used to accept a copy of the tax return as support for the taxes paid but are now insisting on transcripts. Make sure you provide something to support your state tax as well. A friend of mine went through this and they initially denied the state tax portion of the foreign tax credit. When he called, all they needed was a screen shot of the deposit of his state refund to prove the tax actually incurred. 

Also op, just FYI in case you're not doing this, you can also claim Social Security Tax and Medicare withheld as part of your foreign tax credit in Canada. Doesn't look like you really needed anymore this year but just something for future reference in case you aren't doing it.


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## Spudd (Oct 11, 2011)

torontomeet1 said:


> Hi, going through this process right now. Does anyone have a an approximate time in which this is resolved once you have submitted all necessary documents, such as the transcripts.
> 
> Also, do you need to call to have them review the documents something in the letter they sent me describes an "adjustment letter".
> 
> ...


This happened to me this past year and it took a couple of months at least for them to resolve it once I had submitted the documents. There's no communication in this time so you're left wondering what's going on, but eventually it did get resolved and I didn't owe anything.


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## torontomeet1 (Sep 27, 2016)

Spudd said:


> This happened to me this past year and it took a couple of months at least for them to resolve it once I had submitted the documents. There's no communication in this time so you're left wondering what's going on, but eventually it did get resolved and I didn't owe anything.


Hi thank you for the information. So you just submitted the documents they requested online and then in a few months they did another notice of reassessment? No 
additional communication? thank you


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## james4beach (Nov 15, 2012)

AltaRed said:


> Don't know what is happening for 'regular' tax returns in terms of re-assessments, but I was told recently in a query about a 'Final T1' in the Estate dept that their backlog for re-assessments from time of receipt of request is 22 weeks and climbing.


I heard the same, about a general backlog for examinations. I phoned CRA to ask them if they had sent me a letter about my own foreign tax credit claim (I thought they would seek additional information every year). I had been concerned that I haven't received anything from CRA and thought maybe I missed the letter.

When I phoned to ask if they've sent out these letters, the agent said that the whole department that does reviews or seeks additional info is back logged.

They said it's still possible we'll see letters asking for more info being sent out late this calendar year. Last year they asked me in August.


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## Spudd (Oct 11, 2011)

torontomeet1 said:


> Hi thank you for the information. So you just submitted the documents they requested online and then in a few months they did another notice of reassessment? No
> additional communication? thank you


Yes, that's exactly what happened.


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## mark0f0 (Oct 1, 2016)

AltaRed said:


> Don't know what is happening for 'regular' tax returns in terms of re-assessments, but I was told recently in a query about a 'Final T1' in the Estate dept that their backlog for re-assessments from time of receipt of request is 22 weeks and climbing.


I have a matter before the Foreign Tax Services office that's now 7 months and counting.


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## torontomeet1 (Sep 27, 2016)

Hey just wanted to let everyone know that from the time I submitted the required documents, it took about 1.5 months to have the matter resolved and a new notice of reassessment. I did pay the amount so I received my money back plus the interest for the 1.5 months. Was not a horrible process.


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