14. How can I avoid double taxation of my Canadian-source income on my U.S state tax return?

Depending on the state in which you are domiciled, you may or

may not be able to avoid double tax. Some states (such as Georgia) do not grant any form of foreign tax credit for Canadian tax, which results in double tax approximately equal to the total state tax ultimately paid. However, some states (such as New York) do offer a foreign tax credit for tax paid to a Canadian province, typically limited to the extent that a credit for the Canadian tax has not been claimed on the federal income tax return.

If you reside in a state that levies income tax, it most likely offers a tax credit for taxes paid to another “state”. It is a question of whether Canada or its provinces are considered a state for this purpose. The distinction is not always made in the instructions
for the state tax return, and it is often necessary to check state legislation or other publications. Upon your request, we can check to see if your home state offers relief from double taxation.