This question and response is similar to 2016-0634941C6. The questions included: Where a taxpayer’s employment duties are performed in a large number of U.S. states and municipalities (e.g. professional athletes), it may be very laborious and cumbersome to obtain transcripts or official notices or statements from each of the states and municipalities. Would the CRA accept U.S. Form 1040-NR showing a deduction against the U.S. federal tax owed for state tax paid as satisfactory support for the amount of U.S. state tax claimed as foreign tax credit? CRA’s response included:
The Canadian FTC is dependent on a confirmed final tax liability with the foreign tax authority and the supporting documents requested are proof of that confirmed final tax liability.
Acceptable supporting documents for individuals reporting U.S. source income are as follows:
- a completed Form T2209, Federal Foreign Tax Credits, for each country to which foreign taxes were paid;
- federal, state, and municipal tax returns and all associated schedules and forms;
- a federal account transcript;
- an account statement or similar document from the state and municipal tax authority;
- all information slips (W-2, 1042-S, 1099); and
- any other document that may be needed to support the claim.