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CANADA FORM NR4

Tripod101
Level 2

HOW IS THE INCOME TREATED AND THE INCOME IS IN CANADIAN CURRENCY, HOW DO I CONVERT IT?

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itonewbie
Level 15

@Terry53029 wrote:

from the US Canada tax treaty: 

"Pensions, Annuities, Social Security, and Alimony

Under Article XVIII, pensions and annuities from Canadian sources paid to U.S. residents are subject to tax by Canada, but the tax is limited to 15% of the gross amount (if a periodic pension payment) or of the taxable amount (if an annuity). Canadian pensions and annuities paid to U.S. residents may be taxed by the United States, but the amount of any pension included in income for U.S. tax purposes may not be more than the amount that would be included in income in Canada if the recipient were a Canadian resident."          here is the link: https://www.irs.gov/publications/p597

I would put the taxable amount under other income


NR4 could be for all sorts of payments made to nonresidents.  US tax treatment will depend on whether what type of income it is (e.g. private pension, government pension, social security, etc.) and whether the taxpayer was a resident of Canada at the time of payment.  Foreign pensions are generally subject to tax for US tax purposes as annuities.  You will need to establish the type of pension it is and, therefore, how basis should be determined; this is especially important because there had been a lot of confusion on the proper US tax reporting position on Canadian RRSP/RRIF until 2014.

@Tripod101 You may also like to refer to another thread for other related considerations.  You should also be very careful in how you read the US-Canada DTA because there are multiple protocols that modified the various articles and clauses.  Under certain circumstances, relief for double taxation under the treaty will require resourcing of income on F.1116.

https://proconnect.intuit.com/community/proseries-discussions/discussion/re-reporting-pension/01/532...

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Still an AllStar

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5 Replies 5
sjrcpa
Level 15

It is treated the same as US income of the same type. Look up the exchange rate.


ex-AllStar
Tripod101
Level 2

If I put it on the 1099R form it will want a Payer Federal ID number and the Canadian number will not work. Any suggestions? Otherwise it has an error.

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Terry53029
Level 12
Level 12

from the US Canada tax treaty: 

"Pensions, Annuities, Social Security, and Alimony

Under Article XVIII, pensions and annuities from Canadian sources paid to U.S. residents are subject to tax by Canada, but the tax is limited to 15% of the gross amount (if a periodic pension payment) or of the taxable amount (if an annuity). Canadian pensions and annuities paid to U.S. residents may be taxed by the United States, but the amount of any pension included in income for U.S. tax purposes may not be more than the amount that would be included in income in Canada if the recipient were a Canadian resident."          here is the link: https://www.irs.gov/publications/p597

I would put the taxable amount under other income

itonewbie
Level 15

@Terry53029 wrote:

from the US Canada tax treaty: 

"Pensions, Annuities, Social Security, and Alimony

Under Article XVIII, pensions and annuities from Canadian sources paid to U.S. residents are subject to tax by Canada, but the tax is limited to 15% of the gross amount (if a periodic pension payment) or of the taxable amount (if an annuity). Canadian pensions and annuities paid to U.S. residents may be taxed by the United States, but the amount of any pension included in income for U.S. tax purposes may not be more than the amount that would be included in income in Canada if the recipient were a Canadian resident."          here is the link: https://www.irs.gov/publications/p597

I would put the taxable amount under other income


NR4 could be for all sorts of payments made to nonresidents.  US tax treatment will depend on whether what type of income it is (e.g. private pension, government pension, social security, etc.) and whether the taxpayer was a resident of Canada at the time of payment.  Foreign pensions are generally subject to tax for US tax purposes as annuities.  You will need to establish the type of pension it is and, therefore, how basis should be determined; this is especially important because there had been a lot of confusion on the proper US tax reporting position on Canadian RRSP/RRIF until 2014.

@Tripod101 You may also like to refer to another thread for other related considerations.  You should also be very careful in how you read the US-Canada DTA because there are multiple protocols that modified the various articles and clauses.  Under certain circumstances, relief for double taxation under the treaty will require resourcing of income on F.1116.

https://proconnect.intuit.com/community/proseries-discussions/discussion/re-reporting-pension/01/532...

---------------------------------------------------------------------------------
Still an AllStar

View solution in original post

lancermc
Level 3

And the Form 1116 instructions for something like this are clear as mud!

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