Ok, I have been fighting with H&R Block for over a week now in trying to figure out what to do with my NR4 on my US tax return.
I left Canada in 2004, and in January 2005 cashed in my RRSP for $40k and of course Canada took the 25% lump of slightly over $10k.
Now, the problem is that apparently in the State of North Carolina where I live, when H&R Block is filling out the state return form, they will not accept the NR4 as evidence of taxes paid in Canada, they want a foreign tax return included with my State tax return or I don't get the foreign tax credit. They're saying I have to pay the State just over $1700US, and for some reason, my refund with the IRS is also lower when we include the Canadian NR4 on our return. The federal return is only considering about $3000 of foreign taxes paid, rather than the full $8000 (converted CAD to USD) that was paid.
Does anyone here have any idea about the correct way to report this NR4 on our federal and state tax returns? We're filing married jointly. Filing separately would cost us even more to the state.
Any suggestions would be much appreciated, I'm at wits end, and really would prefer not to have to pay additional taxes if I don't have to.
NR4 for Canadian RRSP non-resident
Moderator: Mark T Serbinski CA CPA
Most tstaes don't give foreign tax credit, so don't feel bad.
Secondly, you should not be including ANY of this income on your state return, since it is not taxable fedearally.
HRBl;ockheads are notoriously wrong on almost anything to do with foreign/Cdn taxation.
Secondly, you should not be including ANY of this income on your state return, since it is not taxable fedearally.
HRBl;ockheads are notoriously wrong on almost anything to do with foreign/Cdn taxation.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
No, the income you report on both your 1040 and your state return should be identical.
It's just that very little if any of your RRSP should be reported on 1040. Please read threads about 8891 etc, to see that only the gains made AFTER you arrived in US are taxable in US.
Therefore, to get the most benefit, You should be using your 25% Cdn tax as a DEDUCTION., not a credit, on your 1040, and this will probably translate over to your state tax return automatically.
IRS does not require a foreign tax return to be filed in order to claim foreign taxes, and nor should your state.
It's just that very little if any of your RRSP should be reported on 1040. Please read threads about 8891 etc, to see that only the gains made AFTER you arrived in US are taxable in US.
Therefore, to get the most benefit, You should be using your 25% Cdn tax as a DEDUCTION., not a credit, on your 1040, and this will probably translate over to your state tax return automatically.
IRS does not require a foreign tax return to be filed in order to claim foreign taxes, and nor should your state.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
ok, I just called them again to say what you told me above, that I doesn't need to be filed at the state level because its not taxable federally, but apparently a portion of it is according to her.
They did the form 1116 to work out the foreign tax credit for the IRS federal return, and it is only saying that $3000 some odd dollars is available as a credit, and the rest of it is being taxed. So are they doing something wrong on the reporting on the 1116? Is that why I'm being double taxed?
AFAIK when I cashed that RRSP I should not be double taxed on that at all, but how they're doing it somehow I am, and the only way I can figure out how not to at this point is to just not report it at all :p
They did the form 1116 to work out the foreign tax credit for the IRS federal return, and it is only saying that $3000 some odd dollars is available as a credit, and the rest of it is being taxed. So are they doing something wrong on the reporting on the 1116? Is that why I'm being double taxed?
AFAIK when I cashed that RRSP I should not be double taxed on that at all, but how they're doing it somehow I am, and the only way I can figure out how not to at this point is to just not report it at all :p
That is a querstion that is answered several times on this site. You need to know the BOOK VALUE of your RRSP on the day you became a US tax resident, either October 2004, or January 2004 or January 2005 depending on how you filed in US for 2004.
Ob doubler taxation, there is no reason whay one goverment can't tax you just because another one did.
However, that is whay there are foreign tax credits to remedy this. But just because a certain income is reported in one country doesn't maen it isn't reported elsewhere
Ob doubler taxation, there is no reason whay one goverment can't tax you just because another one did.
However, that is whay there are foreign tax credits to remedy this. But just because a certain income is reported in one country doesn't maen it isn't reported elsewhere
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
