I'm a res-alien who lived in the US for all of 2017. I earned taxed maternity leave pay in Canada from the govt and my former employer. Should I use a Foreign Tax Credit?

[akselrad-j]

I moved to the US as a resident-alien right at the end of 2016 with my 2 month old daughter. I lived in the US for all of 2017, during which I received foreign maternity leave pay from the Canadian government and from my former employer. This pay was taxed in Canada. I'm not sure what the best option is for handling the foreign taxes I paid on these benefits. I thought I could use the Foreign Earned Income exception, however I didn't live in Canada at all during the year.

[DS30 · Accepted solution]

Yes - If you are a US resident alien, paid Canadian taxes on the maternity leave pay and you are including this income on your US income tax return, then you will be able to take the foreign tax credit. (The foreign earned income exclusion will only apply to working in another country and meeting either  meet the Bona Fide Residence Test  or the Physical Presence Test but if living in US, you will not be eligible.)