Canadian EAP taxable?

[SirTaxedAlot]

Greetings.

My son is working towards a degree at a US University in TX and has received a distribution from a Canadian education assistance plan my sister started when he was younger. Would the EAP payment be non-taxable? A 15% witholding has already been applied.


Thanks

[SirTaxedAlot]

OK well, apparently my son is the beneficiary of an RESP that is taxable. So as a foreign trust, a 3520 and 3520-A has to be submitted by March 15...wonderful! He just recently received the NR4 statement.

So my next questions/conclusions would be since he is the US beneficiary:
1 - He can claim a foreign tax credit on the Cnd witholding for the full distribution
2 - Since my sister (Canadian residing in Canada) is the Grantor/owner of the trust and made all of the contributions, do I need her statements from the plan to complete the above mentioned forms? or since the whole distribution is taxable...does it matter?


TIA

[nelsona]

The 3520 trust reporting is a pain. However the tax issue should be a problem.

The income is reportable, and the 15% witheld can be used either asa credit or itemized deduction (depending on which yeilds a lower US tax rate).

I would just make it all taxable, his other deductions and credits should wipe out any tax.

he may even be able to file a 217 return in Canada and reduce the 15% Cdn portion even lower.