T2209
Federal Foreign Tax Credits
Who Must File
Canadian residents who paid foreign income taxes (such as US federal tax) and want to claim a credit against Canadian federal tax to avoid double taxation.
Deadline
Filed with T1 General by April 30 (or June 15 for self-employed)
Penalty
No separate penalty, but failing to claim the credit results in double taxation
Step-by-Step Filing Instructions
Determine the foreign income by country and type (non-business, business).
Calculate the foreign tax paid on each type of income.
Convert US taxes to Canadian dollars using the exchange rate when the tax was paid.
Complete the T2209 for federal foreign tax credits.
Complete the applicable provincial foreign tax credit form (e.g., ON428).
Enter the credit on line 40500 of your T1 return.
Tips & Best Practices
Non-business foreign tax credit is limited to the Canadian tax attributable to the foreign income.
Business foreign tax credits have different carry-forward rules (10 years forward, 3 years back).
You may also need to file provincial foreign tax credit forms depending on your province.
Frequently Asked Questions
Can I claim credit for US state taxes?
US state income taxes are generally claimable as foreign non-business income tax on the T2209 and/or the provincial foreign tax credit form.
What if my US tax exceeds my Canadian tax on the same income?
The foreign tax credit is limited to the Canadian tax on the foreign income. Any excess US tax cannot be refunded by Canada.
Do I file T2209 for business income tax paid to the US?
Yes, but business income foreign tax credits have their own section on T2209 with different limitation calculations and carry-forward rules.
Not sure which forms you need?
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