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That is what I do, too. I meant in my post that you need to enter it on Schedule D, which then gets automatically transferred to 1040nwith software.

It’s reported on 8621 and Schedule D (long term), which gets transferred to 1040 by software.

Simple interest is reported on Schedule B, not a gain.

Most Canadian brokerages will allow you to buy/sell on US exhanges, hence avoiding the issue nelsona raised as well as the PFIC issue from the US tax standpoint. If this is your chosen route, then you should look for a brokerage with reasonable exchange rates.

That’s what I thought. Any ideas about other social benefits like an RESP CESG or CLB? Is there a synonymous income in the U.S. that is taxable? If Canada is contributing the CESG and CLB to the corpus of the RESP trust, then can I truly ever own it and how could the income ever be attributed dire...

I may be overthinking this, but I am having trouble finding citations supporting CCB being treated as a social benefit under the treaty.

Article XVIII provides how “social security benefitsâ€￾ are taxed in the two countries:

“5. Benefits under the social security legislation in a Contracting State (including tier 1 railroad retirement benefits but not including unemployment benefits) paid to a resident of the other Contracting State shall be taxable only in that other State, subject to the following conditions:

(a) a benefit under the social security legislation in the United States paid to a resident of Canada shall be taxable in Canada as though it were a benefit under the Canada Pension Plan, except that 15 per cent of the amount of the benefit shall be exempt from Canadian tax; and

(b) a benefit under the social security legislation in Canada paid to a resident of the United States shall be taxable in the United States as though it were a benefit under the Social Security Act, except that a type of benefit that is not subject to Canadian tax when paid to residents of Canada shall be exempt from United States tax.â€￾

Article XVIII 5(b) provides that benefits paid under the Canadian social security legislation to US persons in Canada are not taxable by the US. However, “social securityâ€￾ is not explicitly defined in the treaty, so we must resort to Article III paragraph 2:

“2. As regards the application of the Convention by a Contracting State any term not defined therein shall, unless the context otherwise requires and subject to the provisions of Article XXVI (Mutual Agreement Procedure), have the meaning which it has under the law of that State concerning the taxes to which the Convention applies.â€￾

Generally, social security refers to OAS and CPP in Canada, and I can find no other reference in the treaty that would support CCB treated as a social security benefit. Am I not looking in the right section of the treaty?

The other issue I see here is if CCB is considered a social benefit then it would follow that the GST/HST credit and even RESP Canada Education Savings Grant (CESG), and the Canada Learning Bond (CLB) are also social benefits, whether or not they are income-based. Welfare benefits in the US are not taxable, but I don’t think the US definition of welfare benefits applies to Canadian welfare/social benefits due to the treaty language.

Are people incorrectly including CCB and RESP CESG as taxable income on 1040, when it could be argued that it is exempt from US taxation?

Ok that’s what I thought. Just wanted to get a sense of how others were handling the situation. I guess GST/HST credit falls under this category as well. So in the case that a benefit it is not taxable (in Canada), I would not enter the income on line 21? Is there any other place or obligation to ...

Sorry, I meant to ask, is it necessary to file form 8833 to report income from the Canada Child Benefit (CCB) and claim the treaty benefit under article XXII? "Article XXII Other Income 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Ar...

Is it necessary to file 8833 to report the income and claim the treaty benefit under article XXII? "Article XXII Other Income 1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that Stat...

The $25000 limit is aggregate from all PFIC shares (not accounts). The limit increases to $50000 for married filing jointly. If your $14000 position in mutual funds represents the total aggregate from all accounts, then you are not required to file 8621 as long as you don’t have any transactions, ...

Since we are already including the income from the QEF on 1040 (ordinary) and Schedule D (capital gains), my understanding is that 1293(c) is used to avoid that income being reported and taxed twice, first as the income from a QEF (in the context of section 1293) and then again as a dividend on Schedule D (in the context of section 316).

I think you are right that 1293(d) is an issue related to basis and not the inclusion calculation.

1293(c) reproduced below:
“(c) Previously taxed amounts distributed tax free
If the taxpayer establishes to the satisfaction of the Secretary that any amount distributed by a passive foreign investment company is paid out of earnings and profits of the company which were included under subsection (a) in the income of any United States person, such amount shall be treated, for purposes of this chapter, as a distribution which is not a dividend; except that such distribution shall immediately reduce earnings and profits. If the passive foreign investment company is a controlled foreign corporation (as defined in section 957(a)), the preceding sentence shall not apply to any United States shareholder (as defined in section 951(b)) in such corporation, and, in applying section 959 to any such shareholder, any inclusion under this section shall be treated as an inclusion under section 951(a)(1)(A).â€￾

My understanding of the passive 1116 filings is that the FTCs can never exceed the U.S. tax liability, and you must take into account standard deduction in figuring that liability. So what’s the advantage of passive 1116 filings if your U.S. tax liability is already reduced by the standard deducti...

I actually have the same question about line 5. I also have PFIC acquired in 2017 and choosing to elect QEF.

My reading of IRC section 1293 is that we should include the total income from the PFIC here: ordinary income plus net capital gains.

“(a) Inclusion
(1) In general every United States person who owns (or is treated under section 1298(a) as owning) stock of a qualified electing fund at any time during the taxable year of such fund shall include in gross income—
(A) as ordinary income, such shareholder’s pro rata share of the ordinary earnings of such fund for such year, and
(B) as long-term capital gain, such shareholder’s pro rata share of the net capital gain of such fund for such year.

(2) Year of inclusion
The inclusion under paragraph (1) shall be for the taxable year of the shareholder in which or with which the taxable year of the fund ends.â€￾

https://www.law.cornell.edu/uscode/text/26/1293

I am trying to make sense of line 44 on form 2555: "Enter on line 44 the total amount of those deductions (such as the deduction for moving expenses, the deductible part of self-employment tax, and the expenses claimed on Schedule C or C-EZ (Form 1040)) that aren't allowed because they are allo...

[quote="nelsona"]What did I write?[/quote]

We both wrote UCCB, but it is in fact CCB. I suppose CCB gets reported in the same way on 1040, but if it is not taxable in Canada then should I still report it? Is there a treaty benefit to claim?