I am a dual-status canadian resident. My employer (a U.S. company with an office in Canada) gives me stocks and stock options, which are U.S. stocks, hence I have a U.S. trading account and should be filing a W9 with my brokerage.
I believe that this means that the brokerage will be withholding U.S. taxes on proceeds from my holdings in this account. However, as a Canadian resident I should be paying taxes to the CRA on those proceeds first, and hopefully be able to apply enough tax credits to not be double taxed.
However, if the U.S. is withholding taxes, what do I do to ensure that the IRS understands that these proceeds are "foreign-earned" income? Since they are U.S. holdings generating the proceeds, and a 1099B will be sent to them by the brokerage, the income would appear to be U.S.-earned income. I presume I would still need to pay Canadian taxes on the proceeds, but I would not have a T5 for it. And I would want to make sure that I get foreign tax credits somewhere. It would make sense to me to apply Canadian taxes as foreign tax credits to my U.S. return as I do my other income, but in this case is it the reverse?
How does one handle this situation?
W9 implications for dual-status canadian resident
Moderator: Mark T Serbinski CA CPA