For those in doubt about whether they may claim Canadian charitable gifts on their US taxes, there can be no doubt that the answer is a resound: “Yes!” Thanks to the generosity of my wife, I have been able to zero out my 2010 tax liability in the United States with our donations to my church and other Canadian registered charities.
Here is the proof text for this claim, directly from the Convention Between Canada and the United States of America With Respect to Taxes on Income and on Capital (emphasis mine):
5. For the purposes of United States taxation, contributions by a citizen or resident of the United States to an organization which is resident in Canada, which is generally exempt from Canadian tax and which could qualify in the United States to receive deductible contributions if it were resident in the United States shall be treated as charitable contributions; however, such contributions (other than such contributions to a college or university at which the citizen or resident or a member of his family is or was enrolled) shall not be deductible in any taxable year to the extent that they exceed an amount determined by applying the percentage limitations of the laws of the United States in respect of the deductibility of charitable contributions to the income of such citizen or resident arising in Canada. The preceding sentence shall not be interpreted to allow in any taxable year deductions for charitable contributions in excess of the amount allowed under the percentage limitations of the laws of the United States in respect of the deductibility of charitable contributions. For the purposes of this paragraph, a company that is a resident of Canada and that is taxable in the United States as if it were a resident of the United States shall be deemed to be a resident of the United States.
If the treaty changed then Petros might be right, but the previous US – Canada treaty definitely did not provide it. The few times that I needed to itemize deductions on a US return when living in Canada, the US only allowed deductions for contributions to Canadian charities from Canadian sourced income. If I had UK sourced income and gave it to a Canadian charity, the US wouldn’t allow a deduction, at that time.
However, what kind of job is Nathan doing? If he’s not a diplomat and he’s performing labour in Canada, his salary is likely to be deemed Canadian sourced no matter who the payer is.
Yes, I am in Canada on a diplomatic posting, so my income would not be Canadian sourced. I was hoping to be able to make local Charitable gifts while posted here, and itemize them on my 1040 like I do for U.S. charities..
Thanks for your thoughtful suggestions.
ARTICLE 21 Exempt Organizations