NR-4 form with a distribution code of 43 (Lump Sum)

Forum|Forum|2 years ago
February 27, 2024
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I took a lump sum distribution in Canada on my RRSP. I need to know what distribution code on the 1099-R to use. Also do I enter the taxes as federal taxes withheld on the 1099-R? Or is that done under the Foreign Income Tax Credit?

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Best answer by ThomasM125

Assuming you did not take an early distribution (before you reach age 59 1/2) from your Canadian retirement account, you would use code "7" for a normal distribution on the entry screen for Form 1099-R. If it was an early distribution, you would use code "1".

You would only enter the taxes withheld on the Form 1099-R entry if they were paid in to the IRS, which seems unlikely since it is a Canadian account. If the taxes were paid to the Canadian government, you can enter them in TurboTax as foreign taxes and you may be due a credit for foreign taxes paid:

Choose the Foreign Taxes option under Estimates and Other Taxes Paid:

ThomasM125Answer

Choose the Foreign Taxes option under Estimates and Other Taxes Paid:

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JWLowryAuthor

I did exactly that except I entered it under Canadian RRSP distribution section of Tax Act which was a 1099-R form. The results were the same. Unfortunately, there was a cap on the amount of the foreign tax credit received.