# How do I decipher a Canadian T4 for US tax reporting?



## TaxPerplexed (Mar 15, 2020)

I need help deciphering a Canadian T4 for US tax reporting on US Form 1040 and Form 2555 (Foreign Earned Income Exclusion). 
Specifically, how do I handle T4 boxes 34, 38, 40 and 14?

1). Box 34 (Personal Use of Employer's Automobile) Approx CAN$7,500

2). Box 38 (Security Options Benefits) Approx CAN$250, which is the difference between the fair market value of shares of US company stock purchased through the employee stock purchase program and the discounted amount actually paid for them. 

3). Box 40 (Other Taxable Allowances and Benefits: TAB-GROUP INS 2) Approx CAN$1,000 of what I think are company-provided life insurance benefits.

4). Box 14 (Employment Income) Approx CAN$108,750. This is the GRAND TOTAL of the above three items (Boxes 34, 38 and 40) together with CAN$100,000 of ordinary wage earnings.

Box 14 of the T4 lumps it all together in one large bucket as "Employment Income," so I wonder -- Is it OK on US Form 1040 to simply classify that combined total (approx CAN$108,750, or roughly US$ 86,750) as Line 1 "Wages, salaries, tips, *etc..*." and also on Form 2555 (Foreign Earned Income Exclusion) Line 19 as "Total wages, salaries, bonuses, commissions, *etc*."? That "*etc.*" seems like a nice, handy catch-all.

Or is it necessary to separate the amounts and report the amounts as four individual entries? * If so, on which Form 1040 and 2555 lines exactly for the car, the stock option benefit, and the life insurance benefit?*

Thanks.


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## Harry Moles (11 mo ago)

My possibly unhelpful response is as follows:

Given that the IRS won't see the T4 and knows only what you tell it, and given that the total amount is well under the FEIE limit so you won't be paying any US tax anyway, why would you not simply use the total on forms 1040 and 2555?


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## TaxPerplexed (Mar 15, 2020)

> ...well under the FEIE limit so you won't be paying any US tax anyway, why would you not simply use the total on forms 1040 and 2555?


Sure, I know what you mean. For 2021. the US tax will amount to $0 no matter what. 

It's just that whatever I do this year is probably what I'll continue doing every year for a long time, so if there's an IRS-prescribed way of listing these specific things (company car, stock options and insurance benefits) from a Canadian T4, I'd just like to take a few minutes to figure it out now. I've already got the separate figures, and entering three additional lines of tax data on my 1040 and 2555 only takes a few seconds -- assuming, of course, I know where exactly to enter it. 

And if the final answer is that the IRS says it's not necessary, great.


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## Harry Moles (11 mo ago)

Fair enough. If it's "every year for a long time" you should at least be asking why you're filing US tax returns, if for example you're a dual citizen with no plans of moving south of the border.


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## Moulard (Feb 3, 2017)

I have zero familiarity with the T4, but here are some thoughts... These are the conservative positions if you are the sort of person who would loose sleep over it. 

You may also want to take a look Pub 525 covers a whole bunch of miscellaneous compensation and fringe benefits.. I have not done so


*Personal Use of Employer's Automobile*
I assume that this is the value you are perceived to have gained through access to use a company car for personal use.
You may be able to exclude some of it from your income if your personal use fits within a qualified transportation fringe benefit.
As this is a fringe benefit I do not think it would fall into the category of earned income, and would probably simply be reported as Other Income.

If your usage is qualified, then maintain a log to differentiate qualified use from non qualified use.

Schedule 1 line 8z

*Security Options Benefits*
Not enough info to assess here as treatment varies depending on if it is stock you now own, an option you now own and if it is an incentive scheme or a purchase plan..Read the stock options section of Pub 525 Again not earned income unless perhaps it was contractually tied to performance. Treat as Other Income

Schedule 1 line 8j

*Insurance Benefits*
I assume these are policy payments made by your employer with you (or your estate) as the beneficiary.
This one is really complicated and may actually depend on the policy terms (is it actually a life insurance policy payable on death, or is there more to it)
Reading between the lines.. another fringe benefit,likely reported as other income... but if you die, then the premium paid would be deducted from the tax on any payout.

Schedule 1 line 8z at a guess

There is also the ugly question of the US Excise Duty that is required to be paid on a foreign life insurance policy that covers a US Person. But the less said about that the better. 

*Employment Income*
Yep added on line line 1 of the 1040 and then subtracted on Schedule 1 line 8d if you happened to chose to use the FEIE rather than tax credits.


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## Harry Moles (11 mo ago)

Good thing the IRS doesn't actually see the T4, then!


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