IRA periodic withdrawals and how it works in Canada

[Russ]

I'm a Canadian citizen / US resident. This is a question for once I return to Canada and become a CDN resident / US non-resident.

I understand that withdrawals from an IRA, after aged 59 1/2 would not be penalized 10% for early withdrawal
I also understand that the institution could withhold 15% or 30% depending on their whim, understanding of the rules and my pushing for the lower rate.
But what I'm not sure is how the actual process works with Canadian taxes.

For an example, If I withdrew $5K US as a monthly periodic amount that would obviously be $60K US a year. Let's say the US institution holds back 30%. That would be $20K US. So in Canada, I believe it would be considered a $20K US Foreign Tax Credit?

So - does that mean that this $20K US could be applied to my Canadian tax that year, and if so, what if I only had a tax bill totaling $10K US that year?
Does the $20K US as a FTC carry forward for future Canadian taxes or do I lose it?

All this wondering as trying to determine what amount I could safely withdraw at some point to not lose out on paying US taxes that cannot be recovered on the Canadian side.

Thanks again for any help.

[nelsona]

Regardless of the withholding in US, you will want to file 1040NR each year to get the EXACT tax rate, which in almost all cases will be less than 15%. IRAs can be reported as connected income, subject to graduated tax rates, not the 15%, 20%, 30% flat rate that IRS requires to be withheld. Your goal is to ensure that your US tax gets fully used on your Cdn return (there is no carryforward in Canada). You could probably get away without filing if the IRA was only withheld 15%, as that is low enough for you to use up in Canada. You will determine this in the first year or two of withdrawals.

Then you will report the gross amount on your Cdn return, as foreign income, and the US tax determined on your 1040NR (including any penalties) as foreign tax towards the foreign income.Generally your Cdn tax rate will exceed the US one, so this will not be a concern, but if it were 30% withholding, that might be pushing it.