I have a university student who worked in Texas for four months last year earning approx. $45K CDN. She has filed her 1040NR and has already received her refund. This was her only income in 2023. In filing her Canadian tax return, our tax structure requires that non-refundable tax credits be applied first before the calculation of foreign taxes credits to offset the tax on that income.
As a university student with full time tuition in 2023 plus unused carryforward amounts, her tuition / education amounts had a cash value (federal + provincial) of approx. $3,500 that now had to be applied to offset this US income. As such, only about 3/4 of the federal taxes paid to the IRS are being claimed on her Canadian taxes. That is all that is required to totally offset the tax on this US income. In contrast, if she had more Canadian income, she could have increased her foreign tax credit by claimed her Social Security and Medicare Taxes paid and these would have been fully reimbursed.
Does anyone know of any methods (forms to file with the IRS) to recoup these two costs directly from the IRS (social security tax and medicare tax as reported on her W2)? Since my client was in the US for less than 180 days and has no intention to return to work in the US, these taxes have no benefit to her and thus could possibly be refunded. The question is how? She has already contacted her employer requesting reimbursement however the employer stated that they had reached out to CRA for advise on this and were advised by the CRA to not reimburse these costs.
Anyone have any suggestions? Thank you.
