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.

Seniors and students

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 The investment house told me that this arrangement was no longer applicable with the demise of NAFTA.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.

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.