We are filing both a Canadian and USA tax returns. The IRS return lists state taxes which is not listed on my W2 which has Federal taxes, social security taxes and medicare taxes. I have input the fed taxes in foreign tax slip under taxes, but there is no place for all the other taxes. Plus, turbotax changes that amount in the end which is confusing. It also shows foreign gross income as NET?? Should I input the net foreign income?
On your Canadian TurboTax return, you need to report the Gross income and total of US taxes withheld on the Foreign Income Screen.
Social Security, Medicare and all State taxes withheld qualify for FTC calculation for the Canadian Federal return and overflow can apply to the Provincial (usually doesn’t happen though). These amounts are all available on the US W-2 slip. All amounts must be converted to Canadian funds as well.
As for the amounts "changing", this could possibly be due to the exchange rate you entered. As long as you input the amounts shown on your W2 and an exchange rate, TurboTax will calculate and apply the Foreign Tax Credits (FTC) to your Canadian return.
This CRA link explains in greater detail about the amounts withheld on the W2 and including them on the Canadian return: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-re...
I have a question in addition to this.
In regards to the income portion, which parts of the W-2 need to be included in the foreign employment income section?
I have on my W-2 specifically:
Wages, tips, other compensation
Taxable cost of group life insurance above $50,000
Elective deferrals to a 401(k)
Cost of employer-sponsored health coverage.
State paid family leave
On TT Foreign Income Form, I don't think we should ever report the total of US taxes withheld shown on the W2 Box 2. Instead, the amount of foreign tax that should be used is the actual amount paid by the individual after filing their 1040 Tax return. I don't remember having ever used the total withheld from the W2 - Box 2, while preparing a T1.
How do I report Income and Deductions from U.S. W-2 statement on my Canadian Tax REturn?
This TurboTax FAQ tells you where you can report foreign income, pension, and other foreign amounts: