Canadian RRSP

Forum|Forum|3 years ago
February 21, 2023
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I have entered my Canadian RRSP withdrawal on form 1116. I am claiming a foreign tax credit on RRSP withdrawal. I have entered both the "total distribution" of $7000.00 and the Taxable distribution of $5400.00 on this form. Am I also required to enter the $5400.00 as income or is this duplicating the amount? How much of the $2400.00 I paid in withholding taxes to the Canadian government am I able to claim as a tax credit on my US return?

MonikaK1

When reporting a foreign pension on your tax return, report the full amount received. Do not deduct taxes paid from the gross income received.

Generally, foreign pensions are taxable to US citizens or residents. However, some foreign pensions might not be taxable if it is covered under any tax treaties between the foreign country and the United States. Seek legal advice if you are not certain whether your pension income is covered by a tax treaty.

If your foreign pension is taxable, you will need to create a substitute form 1099-R.

Here are the steps:

In TurboTax online,

Sign in to your account and select Pick up where you left off
At the right upper corner, type in 1099r, then Enter
Select Jump to 1099r
Follow prompts
Next screen, Choose your bank or brokerage, select I'll type it in myself
Follow prompts. On the screen "Tell us if any of these uncommon situations apply"
Check the box I need to prepare a substitute 1099-R and follow the prompts.

You also complete the Foreign Tax Credit (Form 1116) interview in TurboTax in order to claim any credit due for foreign taxes paid. You will find the entry screens under Deduction & Credits, Estimates and Other Taxes Paid, Foreign Tax Credit.

See this TurboTax article for more information.

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j9gibbAuthor

Your answer is a little confusing. There is a place under Wages and Income to report "Canadian Registered Pension Income". Why would I need to add a 1099R as you have indicated?

ThomasM125

I believe you are referring to the foreign earned income and exclusion section where you entered your foreign income. That section is for entering foreign wage type income. You should enter your pension income as a form 1099-R entry, as mentioned by @MonikaK1 To apply for the credit for foreign taxes paid, you will use the Foreign Taxes menu option, under Estimates and Other Taxes Paid, which is in the Deductions and Credits section in TurboTax.

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