Section 217 Rules

[zyggy 9]

We did a Section 217 reutrn this year for my wife's EI Income and got a whopping $2,500 back. If received EI and very little other income in the US, you could be in for a big tax refund... You have until June 30 to file for it for 2005.

Edited May 12, 2006 by zyggy

[canucker18 0]

How exactly does it work?? I entered the US in February. Would I have to do it next year? Can I do it this year??

[zyggy 9]

How exactly does it work?? I entered the US in February. Would I have to do it next year? Can I do it this year??

Yes.. since you arrived in February, it would apply to you for your 2006 T1...

It works like this... When you're a non-resident, a 25% non-resident tax is withheld from your return. Under Section 217, your tax rate as a non-resident is either 25% or the federal non-resident tax rate (normal federal tax rate + non-resident curcharge) that is related to your worldwide income which ever is less. If you lived in Canada for part of the year (like in your case), you could file as a Partial Year Section 217 for your Leving Canada return. That is treat yourself as a resident for the time that you were in Canada, and as a 217 for the time that you were outside of Canada.

This year (2005) if your income was less than $35,595 CAD, it's typically better for you to take the Section 217 (federal + Provincial tax rate is less than 25%)... if you made more than that amount... it's better to just do your taxes the regular way and not worry about the non-resident witholding tax...

[canucker18 0]

I guess I will have to do it next year. I did make under 35K last year (2005) but I have already filed my taxes as a resident as per the International Tax Offices info.

So, next April, when filing my 2006 return, I can use this fort he 2 months I was in Canada and working still??

And this section 217, if it on the Canadian Tax return??? Do I need to request anything special??

I'm going to save this topic, so am just asking now so I have it all in one place.

Thanks for the help!!!!!

[Flames9_RN 358]

yep, makes a big difference!!! Used it this past yr.

[zyggy 9]

I guess I will have to do it next year. I did make under 35K last year (2005) but I have already filed my taxes as a resident as per the International Tax Offices info.

So, next April, when filing my 2006 return, I can use this fort he 2 months I was in Canada and working still??

And this section 217, if it on the Canadian Tax return??? Do I need to request anything special??

I'm going to save this topic, so am just asking now so I have it all in one place.

Thanks for the help!!!!!

YEah, you would fill out the return for the province that you lived in when you left Canada and do it the same as if you were doing a normal return.

If you do only a Leaving Canada return, all you would do is declare your income while you were still resident in Canada. You would also place LEAVING CANADA RETURN across the top of your T1.

For a Section 217, you include all your worldwide income for the entire year and you write on the top LEAVING CANADA RETURN- PARTIAL SECTION 217. In this case, you would include your worldwide income.. and for your taxes taken out you would include the 25% taken out of your EI, the taxes taken from your income while you were still in Canada.. and your taxes taken out of any US income to be declared as a foreign tax credit.

You file the return that gives you the most money back...

Edited May 15, 2006 by zyggy