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Report US tax refund from Canada?

Forum|Forum|2 years ago
October 12, 2023
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In 2022 I sold a condo in Canada and paid Canadian capital gains tax. This year received a tax refund from Revenue Canada. Do I have to report this to the IRS on my 2023 1040?

Best answer by pk12_2

@DEB317 , assuming you were US person ( citizen / GreenCard/ Resident for tax purposes) during the tax year 2022 , that you recognized this sale of this capital asset ( i.e. you included this in your world income ) for US tax purposes and that to ameliorate the double taxation ( by Canada and the US) effects, you chose either foreign tax credit or tax deduction --- YES you would need to amend your 2022 Federal return and perhaps State ( depends on the state laws -- what state ) to reconcile the change in Canadian tax for the asset disposed.

You do not report this on your 2023 return ( due in 2024 April ).

Does this make sense ? Is there more I can do for you ?

pk

Employee

pk12_2Answer

Employee

@DEB317 , assuming you were US person ( citizen / GreenCard/ Resident for tax purposes) during the tax year 2022 , that you recognized this sale of this capital asset ( i.e. you included this in your world income ) for US tax purposes and that to ameliorate the double taxation ( by Canada and the US) effects, you chose either foreign tax credit or tax deduction --- YES you would need to amend your 2022 Federal return and perhaps State ( depends on the state laws -- what state ) to reconcile the change in Canadian tax for the asset disposed.

You do not report this on your 2023 return ( due in 2024 April ).

Does this make sense ? Is there more I can do for you ?

pk

D

DEB317Author

However, the Canadian refund was not received until this year. So, presumably, this must be reported on my 2023 1040.:Also, in amending my 2022 return for the sale, how exactly do claim the foreign tax credit on my TurboTax form? Thanks

P

pk12_2

Employee

@DEB317 , even if you received the refund from Canada in 2023, it for tax year 2022. So , if you have claimed an original amount on US taxes ( or did not but now want to do so ) you file an amended return for US tax year 2022.

To amend a filed and accepted return 2022 return ( I am assuming here that you have on your computer 2022 Cd or downloaded version the Tax software ), select "AMEND a RETURN". From here on TurboTax will walk you through the process -- essentially you prepare a changed return using the original as basis ( just as you used your 2021 return as the basis for the 2022 except it is much more involved). and get both an amended 2022 ( 1040 with all the schedules ) and a 1040-X ( a summary of the changes ).

Does this help or do you need more details ?

pk