Entering Canadian Pension Income and Tax Withheld in Turbo Tax

Forum|Forum|2 years ago
February 20, 2024
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Where do I input in TurboTax Canadian Pension Income and tax withheld, as per the Canadian's Employers completed NR4 Form, Income Code 39? The background is that I am now a U.S. Citizen, but receiving Canadian Pension income for a few years that I worked for an employer in Canada.

I saw a few posts on this topic, but unless I missed it, I didn't see anything definitive.

Thank you!

Best answer by DaveF1006

No. You would enter this as other income and then report your taxes paid in the Foreign tax Credit to receive credit for the withholding tax paid. Here are the sequence of steps to report.

To report the income.

Log into your account
Select Wages and income>other income
Miscellaneous Income, 1099-A, 1099>start
Scroll to the bottom of the page to Other Reportable Income
Other taxable income, answer yes
Then give a brief description of the income and the $ amount listed. Describe it as Canadian Foreign income'

Now to report the tax withholding for the Foreign Tax Credit.

Open Turbo Tax
Go to federal>deductions and credits>estimate and other taxes paid
Foreign taxes >start
Start answering questions. Make sure you answer the question correctly about if this is the first year you are making the simplified election
Answer the questions in the next screens until you reach a screen that talks about income type. indicate this is general category income.
Next screen is where you add the country your foreign income was earned in.
Next screen will ask you what your source income earned in that country. Here you will report the pension amount. Don't worry, this is not reported as income in your return but is used to determine the foreign tax credit.
You will continue answering questions until you get to a screen that says foreign taxes paid to XXXX. Be sure not to list a date at the bottom beyond 12/31/2023 or you won't get the foreign tax credit and will show up as an error in your return

Cynthiad66

Per IRS Publication 915:

Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U.S. residents are treated for U.S. income tax purposes as if they were paid under the social security legislation of the United States.

In other words, if you're a U.S. resident, you'd enter your Canadian CPP and OAS benefits as though you'd received a Form SSA-1099 from the Social Security Administration.

The U.S.-Canada tax treaty also applies to the Québec Pension Plan (RRQ). Note that the agreement only addresses government-issued Social Security benefits, not money received from private Canadian pensions.

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darylwalker1Author

Thanks for the reply. The Pension I receive from Canada is from a private party (General Electric), versus the government, when I worked at GE several years ago. Accordingly, based on your post, I don't think it is proper inputting the GE Canadian pension income / taxes paid from the NR4 Form in TurboTax, as if it was a SSA-1099.

To clarify my question, I appreciate any guidance on where I should input into TurboTax private party pension income and taxes paid, per the Canadian NR4 Form, Income Code 39.

Thank you!

DaveF1006Answer

No. You would enter this as other income and then report your taxes paid in the Foreign tax Credit to receive credit for the withholding tax paid. Here are the sequence of steps to report.

To report the income.

Log into your account
Select Wages and income>other income
Miscellaneous Income, 1099-A, 1099>start
Scroll to the bottom of the page to Other Reportable Income
Other taxable income, answer yes
Then give a brief description of the income and the $ amount listed. Describe it as Canadian Foreign income'

Now to report the tax withholding for the Foreign Tax Credit.

Open Turbo Tax
Go to federal>deductions and credits>estimate and other taxes paid
Foreign taxes >start
Start answering questions. Make sure you answer the question correctly about if this is the first year you are making the simplified election
Answer the questions in the next screens until you reach a screen that talks about income type. indicate this is general category income.
Next screen is where you add the country your foreign income was earned in.
Next screen will ask you what your source income earned in that country. Here you will report the pension amount. Don't worry, this is not reported as income in your return but is used to determine the foreign tax credit.
You will continue answering questions until you get to a screen that says foreign taxes paid to XXXX. Be sure not to list a date at the bottom beyond 12/31/2023 or you won't get the foreign tax credit and will show up as an error in your return