Concerning your Universal Child Care Benefit, Form RC62, amount for $500. This is something which is unique to Canada and the United States does not have such an items of which is from the Federal Government. So I looked and researched to see if this was taxable income to the United States.
1) The UCCB is taxable and must be reportable as income if you need to file a tax return.
2) The Canadian US Tax Treaty states that if an item is not taxable to one State then that item is not taxable to another State.
3) The spouse with the lower net income has to report this amount on line 117 of his or her return regarless of which person received the benefit.
4) Could not find the information but your spouse is filing married filing jointly so the spouse would have to report all worldwide income in order for you to be able to file jointly with your spouse. This would have been a prior election.
But I have determined that this $500 CAD income is not taxable on your US tax return because if your spouse were to file a tax return it would not be taxable.
Your spouse under number 3 and 4 is the only one that can claim this income. And since this is (number one) taxable income but the Revenue Canada return which is filed separately would account for no taxable income and since the treaty (number three) specifically disallowed an item from being taxable if this is not taxed in Canada then this is not taxable in the United States and this is the reason why I will not be including your UCCB amount of $500 on your US tax return.
The spouse lives in Canada and has no income. The taxpayer lives in Canada and works in the United States under a work visa. The spouse has previously elected to include all worldwide income in the United States income tax return.
The RC62, Universla Child Care Benefit is new for Revenue Canada income tax returns as of 2007. The wording on the treaty was near the end of the treaty wording itself.
This is interesting because in the United States we also as well as Canada have a daycare credit on Form 2441. The employer can pay this amount. This Canadian credit is designed for low income stay at home moms and would seem to be a social repayment. If the income is too high then the amount of the benefit would slowly vanish. In the United States the daycare credit has a maximum amount of credit benefit of 20% and does not get eliminated. The only State where the amount is subsequently eliminated is in California which as of a few years ago limited the amount of the daycare credit to $100,000. I believe they have been slowly increasing this amount every year by a yearly increased inflation factor.
Having fun now.