# Canada Universal Child Care benefits



## ihaveboys

What would this "income" be listed under? It's not unemployment. It's money given to families with kids a certain age. It is taxed in Canada. Would I just list it under my regular income (wages, salaries, tips ect) as it being an "ect."? What I mean is, I can't figure out where to include it on the 1040. Thanks!


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## Bevdeforges

Easiest is probably "Other income" - line 21. This is also the same line you put your FEIE credit (in parentheses) on, so you may want to attach a little schedule showing something like:

Line 21 form 2555 (43,350) (or however much your FEIE works out to be)
Canada Universal Child Care Benefits 5,000 (or however much)

Total reported line 21: (38,350) or whatever the net of your negative FEIE and your positive benefits winds up being.

Cheers,
Bev


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## ihaveboys

Thanks Bev....wait for it wait for it....THAT MAKES SENSE! WOoohoo!  I'm going to figure this out if its the last thing I do. heh


Btw, you're help is amazing. I really appreciate it.


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## ihaveboys

this cannot be right. I'm being taxed on my child benefits in Canada...and I'm being taxed on my EI benefits in Canada, yet I can't included them into my FEIE? That means I'm going to get double taxed on them....what am I missing?


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## Bevdeforges

ihaveboys said:


> this cannot be right. I'm being taxed on my child benefits in Canada...and I'm being taxed on my EI benefits in Canada, yet I can't included them into my FEIE? That means I'm going to get double taxed on them....what am I missing?


It depends - if your exemption and standard deduction cover the amount of your child benefits, your "taxable income" will still wind up as -0- (on the flip side of the 1040 form) and you won't pay tax on them. (If you're receiving child benefit in Canada, you may well qualify to file as "Head of Household" which gives you a larger personal exemption and standard deduction. The child, however, will need a US social security number if you are going to claim him or her.)

If that's not the case, then you break out the form 1116 and claim a tax credit for the tax paid on your child care benefit against whatever tax you may have incurred on the 1040.

It's a bit of a game, but it usually turns out ok in the end.
Cheers,
Bev


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## ihaveboys

I make very little money, I'm under 20K for a family of 5...the year I'm talking about, I was on EI for mat leave, I was getting a child benefit check, I had a very small amount of babysitting money, and I had employment income. The FEIE is not covering the child benefit or the Mat Leave EI...and I do form 1116 and it's not covering it all either! How can it be that I make so little but still owe the US govt money when I haven't lived there since 1998!! I'm furious and I don't know what I'm doing wrong I have wasted so much time on this, hours and hours I could be spending being a mother to my kids.


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## ihaveboys

SO, for head of household, my husband and I pay out of the same pool. We put all our money in a bank account and I pay the bills from there. It's impossible to tell or say that I paid half of maintaining our home. There is no record of that saying my money goes here, his money goes there. He makes more money than I do, as well.


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## ihaveboys

OH wait a minute. I may have found my mistake. ON form 1040 39b it asks if you were a dual status alien...I misunderstood it as meaning dual citizen. OH MY GOSH...so I wasn't taking that additional 5350.00 standard deduction along with my exemption for myself and my son of 3400 each. Good grief.


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## Peg

It is easy to get confused! It was all worth it though when 4 months later I got the results of the 5 years of returns and the IRS accepted mine as submitted - i.e., I did not have to pay a fancy accountant.

If I remember correctly, I was also able to deduct the EI premiums I paid from the EI income. 

The only year where I had to scramble to find deductions was my lowest income year. My guess is that while Canadians do pay higher taxes we get more breaks at the lower income levels. Really sad commentary to me given how little many wealthy US citizens and corporations pay in taxes.


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## ihaveboys

that was exactly my issues a few yrs Peg! My income for a few yrs was mostly due to EI maternity benefits and a child benefit here and so I had to end up taking an exemption for my oldest son (who has a SSI # from when he was a baby). 

I JUST finished from 2003 to 20011 and it appears I owe nothing! Well aside from a self employment tax which I'm sure I can be exempted for under the Totalization Treaty between Canada and US since I paid into the CPP system up here the entire time. *fingers crossed that Revenue Canada gives that to me*


Question though. I have SOOOO many scribbles out and chicken scratches on these forms. Is it ok to send them like that or should I go back through and redo them on new form to make them "pretty" or not bother?


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## Bevdeforges

ihaveboys said:


> OH wait a minute. I may have found my mistake. ON form 1040 39b it asks if you were a dual status alien...I misunderstood it as meaning dual citizen. OH MY GOSH...so I wasn't taking that additional 5350.00 standard deduction along with my exemption for myself and my son of 3400 each. Good grief.


Oh, that DOES explain it. You're entitled to the standard deduction and your personal exemptions for yourself and your son. (You say you're a family of 5 - I guess you're only taking your son because he's a US citizen and has the necessary SS number?) 

Normally, if your husband is not a US citizen and not subject to US taxes, you'd file as married, filing separately, but if your son is also a US citizen and you can (roughly) prove that you contribute at least half of his support (should they question it), Head of Household is the way to go.

It takes filing the forms a couple times to get all the tricks that are second nature to those of us who started filing early.
Cheers,
Bev


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## Bevdeforges

ihaveboys said:


> that was exactly my issues a few yrs Peg! My income for a few yrs was mostly due to EI maternity benefits and a child benefit here and so I had to end up taking an exemption for my oldest son (who has a SSI # from when he was a baby).
> 
> I JUST finished from 2003 to 20011 and it appears I owe nothing! Well aside from a self employment tax which I'm sure I can be exempted for under the Totalization Treaty between Canada and US since I paid into the CPP system up here the entire time. *fingers crossed that Revenue Canada gives that to me*
> 
> 
> Question though. I have SOOOO many scribbles out and chicken scratches on these forms. Is it ok to send them like that or should I go back through and redo them on new form to make them "pretty" or not bother?


Once you've got your number figured out, just download the pdf forms from the IRS site. You can fill those in on your computer and print them out, which gives you nice, legible numbers. (Make it easy for them to see you're not "hiding" anything.) I also like the pdf forms because the print is really, really tiny and I figure they ought to squint a little bit over these forms, too.
Cheers,
Bev


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## ihaveboys

ah yeah, that makes since, and then I can keep these chicken scratch ones as my copies. 


your last comment made me giggle...a.lot.  Make em squint!


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## Peg

ihaveboys said:


> ... Well aside from a self employment tax which I'm sure I can be exempted for under the Totalization Treaty between Canada and US since I paid into the CPP system up here the entire time. *fingers crossed that Revenue Canada gives that to me*
> 
> 
> Question though. I have SOOOO many scribbles out and chicken scratches on these forms. Is it ok to send them like that or should I go back through and redo them on new form to make them "pretty" or not bother?


My understanding is that you are exempt from the SE tax if you did pay CPP on your self-employment earnings. In my situation, my SE income was nominal and therefore not enough to pay CPP.

I agree with Bev --- type in the PDF forms and print two copies. That way you have a printed copy plus an electronic copy.


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## ihaveboys

I paid CPP on my self employment one yr and the next year I didn't because I was also working at another job as well as my self employment, so that yr I even got a refund from paying in too much CPP from my job. So, I sent off a letter to Rev. Canada and I guess we'll see what they say, if they send me my exemption letter to give to the IRS or not. We're talking all of 100.00 here and it's going to burn my biscuits if I have to pay that and penalties on top of it. LOL.


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## Peg

ihaveboys said:


> I paid CPP on my self employment one yr and the next year I didn't because I was also working at another job as well as my self employment, so that yr I even got a refund from paying in too much CPP from my job. So, I sent off a letter to Rev. Canada and I guess we'll see what they say, if they send me my exemption letter to give to the IRS or not. We're talking all of 100.00 here and it's going to burn my biscuits if I have to pay that and penalties on top of it. LOL.


My self-employment tax to the IRS of approx $100 end up costing me an additional $180 in penalties and interest; and that was on just $750 of self-employment earnings. Still cheaper than hiring an accountant to do all the returns!

I assure you that in my heart I wanted to fight it but it just wasn't worth it.

Did you get the Making Work Pay refund of $400 for 2010?


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## ihaveboys

Peg said:


> My self-employment tax to the IRS of approx $100 end up costing me an additional $180 in penalties and interest; and that was on just $750 of self-employment earnings. Still cheaper than hiring an accountant to do all the returns!
> 
> I assure you that in my heart I wanted to fight it but it just wasn't worth it.
> 
> *Did you get the Making Work Pay refund of $400 for 2010?*


No! I don't even know what this is. To be honest, when I got to the Zero's in tax owed I just filled out zeros on the rest of the form. What is this Making Work Pay refund?


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## ihaveboys

ahh ok. I wouldn't be able to get this anyway. I just looked into it. My only earnings for 2010 was 2400.00 from my child benefits in CND. And it's below the filing requirements. I didn't "earn" anything through work. You know, cause being a mother is not work at all!


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## Mother_in_BC

*Canadian Children need SSN?*



ihaveboys said:


> OH wait a minute. I may have found my mistake. ON form 1040 39b it asks if you were a dual status alien...I misunderstood it as meaning dual citizen. OH MY GOSH...so I wasn't taking that additional 5350.00 standard deduction along with my exemption for myself and my son of 3400 each. Good grief.


This is my first post so I'm not sure if I should be continuing this thread or starting a new one (since it is now October) but it is a very similar question / problem.

The only income was Canadian parental / maternity benefits and the Universal Child Credit. The Canadian tax was zero so I don't think the 1116 helps me here. If I claim both the Standard Deduction and an exemption for mother and child then I'm back to zero US tax. However, the child doesn't have a SSN yet. Do people think that this line in Pub 501 mean I can claim the child without a SSN because we are residents of Canada?

"Citizen or Resident Test 

You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico. However, there is an exception for certain adopted children, as explained next."

Thanks for any suggestions,

Peter (on behalf of my wife)


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## Mother_in_BC

*Child must have a SSN / ITIN*



Mother_in_BC said:


> Do people think that this line in Pub 501 mean I can claim the child without a SSN because we are residents of Canada?
> 
> "Citizen or Resident Test
> 
> You cannot claim a person as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico. However, there is an exception for certain adopted children, as explained next."


Well, it turns out NO. The child must have a SSN or ITIN. Ended up giving 10% of the maternity benefit to Uncle Sam and another 10% in penalties for late filing...


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## BBCWatcher

I'm a little confused since I thought it's quite easy to get a Social Security Number or ITN. Also, would the new IRS program for "low risk" overseas taxpayers apply? Finally, did you check the tax treaty?


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## Bevdeforges

BBCWatcher said:


> I'm a little confused since I thought it's quite easy to get a Social Security Number or ITN. Also, would the new IRS program for "low risk" overseas taxpayers apply? Finally, did you check the tax treaty?


It's relatively easy to get an ITIN, but for that you need to be ineligible for a social security number (and, I suppose, able to prove that). A SS number can be trickier, depending on the age of the applicant - the question is always why didn't the parents file for the soc number at birth?

The IRS program for "low risk" overseas taxpayers only deals with filing back taxes and FBAR/FATCAT filings, not with getting a SSN or ITIN.
Cheers,
Bev


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## Mother_in_BC

Bevdeforges said:


> the question is always why didn't the parents file for the soc number at birth?


In my defense, we haven't yet applied for the SSN because there is no reason to apply - other than facilitating US taxes. Also, considering the burden the US places on offspring born abroad we are considering renouncing the child's citizenship while they have zero assets to seize.

The only reason any taxes were owed is because the US taxed Canadian government payments. Don't you think that it is a little unusual to tax a foreign government's social benefits? I imagine there is a whole different thread devoted to people on unemployment assistance who then owe a portion of that income to the US.


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## BBCWatcher

Unless your child is (metaphorically) Justin Bieber -- who pays U.S. taxes anyway because so much of his income is U.S. sourced -- he/she will also very likely have zero or near zero assets (and zero filing requirements) at age 18 when he/she can make his/her own independent citizenship decision as an adult (along with a decision whether to attend Harvard or Stanford, hopefully, followed by whether to start the next Facebook or the next Google). I'd at least give that idea some thought.


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## Bevdeforges

Mother_in_BC said:


> In my defense, we haven't yet applied for the SSN because there is no reason to apply - other than facilitating US taxes. Also, considering the burden the US places on offspring born abroad we are considering renouncing the child's citizenship while they have zero assets to seize.
> 
> The only reason any taxes were owed is because the US taxed Canadian government payments. Don't you think that it is a little unusual to tax a foreign government's social benefits? I imagine there is a whole different thread devoted to people on unemployment assistance who then owe a portion of that income to the US.


I don't believe they will let you renounce US citizenship for your child. He may have to wait until he turns 18 (or possibly 21) before he can "reject" his US nationality on his own.

You're definitely preaching to the choir on the matter of US taxation policy. It sucks, it's unfair, it's any number of other things I probably shouldn't post on this site. For those with modest incomes and few assets, it's relatively easy to lay low and avoid the IRS radar - depending on the nature of their US citizenship (i.e. born in the US vs. born elsewhere with one US citizen parent, etc.) and their need or desire to travel to the US now and then.
Cheers,
Bev


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## BBCWatcher

Yes, but let's not get too carried away. For comparison, several other governments impose a huge tax on their citizens: they require all their young adult citizens to serve in their armed forces (and in many/most cases to return from abroad if necessary to fulfill that service) for 2 years or more.

Some would argue that conscription is a form of slavery. It is at least a government obligation far more disruptive (and sometimes life ending!) than a relatively low (by developed economy standards) personal income tax with expatriate exclusions at least twice America's median income level, plus credit for other taxes paid. The U.S. abolished this particular globally popular tax (military conscription) 40 years ago. That's a lot of tax savings!

Anyway, I'm not able to muster too much sympathy for U.S. citizens in this regard. They're quite lucky in many ways.


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## Bevdeforges

What other government taxes their citizens resident outside the country? I think that's the main point of contention here. 
Cheers,
Bev


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## maz57

Mother_in_BC said:


> In my defense, we haven't yet applied for the SSN because there is no reason to apply - other than facilitating US taxes. Also, considering the burden the US places on offspring born abroad we are considering renouncing the child's citizenship while they have zero assets to seize.
> 
> The only reason any taxes were owed is because the US taxed Canadian government payments. Don't you think that it is a little unusual to tax a foreign government's social benefits? I imagine there is a whole different thread devoted to people on unemployment assistance who then owe a portion of that income to the US.


Yes it is unusual. It's also criminal and immoral. The US is happy to take money paid to Canadian resident parents and their children. If the US is to have any credibility at all they need to fix this archaic tax system and adhere to the same standard as the rest of the civilised world.


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## maz57

BBCWatcher said:


> Yes, but let's not get too carried away. For comparison, several other governments impose a huge tax on their citizens: they require all their young adult citizens to serve in their armed forces (and in many/most cases to return from abroad if necessary to fulfill that service) for 2 years or more.
> 
> Some would argue that conscription is a form of slavery. It is at least a government obligation far more disruptive (and sometimes life ending!) than a relatively low (by developed economy standards) personal income tax with expatriate exclusions at least twice America's median income level, plus credit for other taxes paid. The U.S. abolished this particular globally popular tax (military conscription) 40 years ago. That's a lot of tax savings!
> 
> Anyway, I'm not able to muster too much sympathy for U.S. citizens in this regard. They're quite lucky in many ways.


Give me an example of how one is lucky to be a US citizen if one is trying to live a life anywhere in the world besides inside the United States. The US continually argues that holding US citizenship is "exceptional". Well it's exceptional all right, but for all the wrong reasons. 

The truth of the matter is that the vast majority of people in the world manage to live happy, prosperous, and productive lives without US citizenship. US citizenship is only useful and desirable if one wants to live in the US. If you don't want to live there, being a US citizen can only cause you problems. Why the US can't see this simple fact is beyond me. The only real benefit of US citizenship if you live abroad is guaranteed right of return. If that is not in your life plan then that citizenship is a liability not an asset.

As for some governments requiring mandatory military service, yes some citizenships are worse than the US for that and many other reasons. Many are considerably better. And the excuse that the FEIE and the FTC relieve average folks of any tax liability therefore the US system only impacts rich guys who can well afford it is a myth perpetrated to justify the unjustifiable. This whole thread demonstrates how the US system negatively impacts people at the bottom of the spectrum. 

I think we are going to have to agree to disagree BBC. We both live in a global, mobile, diverse world. Governments are going to have continually assess how they compare to other governments and systems; people and capital will naturally gravitate to where they can most prosper. I became a Canadian and lost US citizenship; I sleep well at night.


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## BBCWatcher

I'm quite surprised there's any disagreement that military conscription constitutes a tax (and of the most severe kind). That's weird to me. But anyway, as a couple examples.....

In addition to the lack of military conscription, U.S. citizens are permitted to own and to sell investments (such as stocks traded on the world's largest exchanges) without 30% IRS withholding. U.S. citizens are permitted to own media outlets in the world's largest media market. U.S. citizens (generally) have guaranteed income in old age and can receive those benefits in almost every country. U.S. citizens have unfettered access to the world's largest economy regardless of place of residence. U.S. citizens are among the most favored in visa free global travel (and soon APEC BTC participation).

.....And they (generally) have to file two tax-related forms every year, yes.

We do realize most of the world's population possesses much less desirable citizenships, don't we?


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## Bevdeforges

BBCWatcher said:


> I'm quite surprised there's any disagreement that military conscription constitutes a tax (and of the most severe kind). That's weird to me. But anyway, as a couple examples.....
> 
> In addition to the lack of military conscription, U.S. citizens are permitted to own and to sell investments (such as stocks traded on the world's largest exchanges) without 30% IRS withholding. U.S. citizens are permitted to own media outlets in the world's largest media market. U.S. citizens (generally) have guaranteed income in old age and can receive those benefits in almost every country. U.S. citizens have unfettered access to the world's largest economy regardless of place of residence. U.S. citizens are among the most favored in visa free global travel (and soon APEC BTC participation).
> 
> .....And they (generally) have to file two tax-related forms every year, yes.
> 
> We do realize most of the world's population possesses much less desirable citizenships, don't we?


Many Western countries have eliminated their military conscription requirements (France, Germany, etc.), and I really fail to see your point on being "permitted" to own investments without the 30% withholding. The only reason that foreign nationals not resident in the US are withheld at the 30% rate is because that's the IRS mechanism for making sure they pay their taxes if they aren't otherwise subject to US taxation. (Most governments withhold tax on foreigners' investment withholdings at the source, too.)

US citizens do NOT have anything like guaranteed income in old age if they haven't lived and worked in the US for the required period of time (now 10 years) and US citizens who wish to return to the US after living most of their adult life overseas are NOT eligible for Medicare and thus find obtaining private health insurance next to impossible. Foreign nationals who lived and worked in the US for the requisite period of time can also receive their US SS retirement benefits in almost any country, too. It's not a benefit of citizenship, but rather of having paid into the system (like the retirement benefits of most countries that offer such things).

Frankly, it's not that much different from the citizenship benefits of many other Western countries. And it can be particularly constraining for the so-called "accidental Americans" - those who have US citizenship due to a technical fluke rather than any period of residence and integration into the society.
Cheers,
Bev


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## BBCWatcher

OK, but most of the world doesn't have "Western" citizenships nor any prospect of getting one. And, while some Western countries have eliminated military conscription, many have not.

Australia, Japan, and the Philippines (as three examples) also have tax regimes with at least substantial citizen-based provisions.

The U.S. does not have wealth taxes (unlike France for example) and does not have VAT (unlike much of the world). (A fair number of states have zero sales taxes, but those that do have rates half or less that of Europe.) U.S. expatriates have full national and (generally) major party primary voting rights unlike, say, expatriate Italians (whose votes are about two thirds less potent) and plenty of others (who cannot vote in their national elections at all -- or who don't have elections).

U.S. citizens have the cheapest and easiest access to (by far) the world's best universities, and they're not forced to leave upon conclusion of their studies. (Nor are they forced to stay.)

U.S. citizens quite simply have the best military and intelligence career opportunities.

U.S. citizens have complete access to the world's largest economy and all that means: the largest and most efficient financial markets, vast sources of venture capital, the planet's largest and most effective business incubator and associated wealth creation engine, a consumer's paradise, a gun owner's paradise, the largest and most vibrant general aviation sector, the overwhelming center of global popular entertainment, etc., etc.

....It simply ain't a bad citizenship. Most others are less desirable.


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## Bevdeforges

You have a distinctly starry eyed view of US citizenship. Nationality is more or less an accident of birth. And frankly, many of the advantages you cite aren't particularly available to citizens who live outside the US anyhow (whether by choice or chance).

But, to each his or her own. I would happily give up my right to vote in US elections if the tax filing requirements were dropped. But that doesn't look like an option anytime soon. I choose not to renounce (at least not now) because of the technicalities of my financial situation more than anything else. Each American living overseas has to assess the options available to them.
Cheers,
Bev


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## BBCWatcher

Starry eyed? No, I'm just being realistic. There are pros and cons to possession of U.S. citizenship, but for most people most of the time and by global standards it's an excellent citizenship to possess. That's just fact, validated by the high ongoing demand for U.S. citizenship (over 694,000 U.S. naturalizations in 2011 in a population of about 310 million). That's a substantially higher naturalization rate than in the EU, another collection of attractive citizenships (over 810,000 naturalizations in 2010 in a population of a bit over 500 million).

Canada has a higher naturalization rate (as a percentage of population) than both the EU and the U.S., I should point out. I never said "most desirable" in reference to U.S. citizenship -- I said "desirable" and would even say "highly desirable." ("Most desirable" is much harder to pin down. A global poll would be one way.)


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