jbander25
New Member

How to enter/treat US income tax withheld on IRA distribution for Canadian resident tax return

I am a dual citizen (US and Canada) residing in Canada.  My only income last year was a distribution from my IRA ( I am over 59 1/2).  Income tax was withheld in the US on this distribution.  I am trying to file my Canadian tax using your software.  I can't figure how where to enter the information about the withholding.

Kashmira-TurboTax
New Member
TurboTax-Duncan
Level 6

Seniors and students

Hi, thank you for using Intuit Turbo Tax Live Community

Usually IRA income is reported on line 115 and the final US tax paid  is claimed as a foreign tax credit. The Canada Revenue Agency(CRA) has information on reporting IRA income:

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-re...

Note: To support the claim for income tax required , CRA may ask for a US tax return to support the claim for the final tax paid.

In general if tax is paid to a foreign jurisdiction and not to Canada the claim on the tax return is for a foreign tax credit on the Canadian tax return

Like the link says you should likely contact CRA to get more information

Hope this helps

 

sometax
New Member

Seniors and students

A word of warning. I withdrew $10k USD from my IRA in 2020. The investment house withheld US tax at 30%. It used to be 15% under NAFTA. The investment house told me that this arrangement was no longer applicable with the demise of NAFTA. So I entered the 30% paid as I filled in my TurboTax for 2020. Now the CRA audited my foreign income and tax and said that I could claim as foreign tax credit only 15% of my IRA withdrawal, not the full 30% which was withheld. This was not picked up by the TurboTax logic. So now the CRA wants almost $2k CAD from me. I did a quick search and found

   https://www.hutcheson.ca/cra-review-of-ira-foreign-tax-credit/

which seems to corroborate the CRA position.

TurboTaxBrenda1
Moderator

Seniors and students

If CRA is saying that it is a calculation error please submit the following: 

How do I submit a claim under the TurboTax 100% Accurate Calculations Guarantee? 

 

Thank you for choosing TurboTax.