US Citizen and Full Year ResidentReceived Canadian Pension and Retirement funds totaling $25K in USDThey did not file a Canadian tax return Do I need to report this income on their 1040 since they are not filing a Canadian Tax Return?Do I wait for them to file the Canadian return and then update their US Taxes with Form 1116 based on the Canadian Taxes?Fill out form 1116 with the $25k income ($0 for taxes paid/accrued) and finalize their 1040? Please let me know if more information is needed.

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parvitstax

Level 6

Solved

How to report foreign income if no foreign return filed

Forum|Forum|1 year ago
October 2, 2024
3 replies
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US Citizen and Full Year Resident

Received Canadian Pension and Retirement funds totaling $25K in USD

They did not file a Canadian tax return

Do I need to report this income on their 1040 since they are not filing a Canadian Tax Return?
Do I wait for them to file the Canadian return and then update their US Taxes with Form 1116 based on the Canadian Taxes?
Fill out form 1116 with the $25k income ($0 for taxes paid/accrued) and finalize their 1040?

Please let me know if more information is needed.

ProSeries Professional

This topic has been closed for replies.

Best answer by Accountant-Man

1. US citizens report worldwide income, so Canadian Pension and Retirement funds totaling $25K in USD are reported on the US 1040 regardless of filing Canada return. They might owe USD on it.

2. Do they need to file Canadian return? There might be CAD $ taxes withheld.

3. Even if they don't file a CAD return, they can still file 1116 since the tax they paid was the withholdings, if any.

Accountant-ManAnswer

Level 13

1. US citizens report worldwide income, so Canadian Pension and Retirement funds totaling $25K in USD are reported on the US 1040 regardless of filing Canada return. They might owe USD on it.

2. Do they need to file Canadian return? There might be CAD $ taxes withheld.

3. Even if they don't file a CAD return, they can still file 1116 since the tax they paid was the withholdings, if any.

** I'm still a champion... of the world! Even without The Lounge.

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parvitstaxAuthor

Level 6

Does reporting Canada pension and Retirement receive similar treatments as US income from similar sources (1099R / 1099SA)

Or does this just fall into a full taxable situation as "Other Income" on the 1040?

sjrcpa

Level 15

The US Canada income tax treaty will have the answers.

The more I know the more I don’t know.

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Terry53029

Intuit Community Champion

see this link.

https://www.irs.gov/businesses/international-businesses/canada-tax-treaty-documents

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Terry53029

Intuit Community Champion

How pensions, and retirement funds are taxed from Canada depend on source (government or private). Where are your clients funds from?. If from Government (like our SS) you report it same as our SS (some may be taxable or not depending on other income. If from a pension from a private company it will be double taxed, and you report it on 1040 schedule 1. Use 1116 to get a credit on that double taxed income. If from investment (like our IRA's) Do same as pension. The above is my interpretation of the treaty, but you need to research yourself.

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parvitstaxAuthor

Level 6

This is what I have done and seems to follow the feedback given here:

I opened the Canadian Registered Retirement Plans Worksheet
Entered the Plan Providers Information
Selected the checkbox for Registered Retirement Income Fund (RRIF)
Entered the total amount received in Retirement income on Lines 7a and 7b
Filled out Form 1116 with the same income total and also reported the tax withheld in Canada as Tax Paid

** All values were converted to USD

Accountant-Man

Level 13

5. So you are claiming a tax credit for CA tax paid on the same income THAT IS BEING TAXED BY THE US.

Where are you reporting the US income?

** I'm still a champion... of the world! Even without The Lounge.

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