Canadian interest

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

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brianbbc
Posts: 63
Joined: Fri Apr 25, 2014 9:17 pm

Canadian interest

Post by brianbbc »

Moved back to Canada July 30. Previous usa resident. Had interest from Canadian bank account prior and after taking up residency in Canada. I know irs will tax me on the entire amount for the whole 2020 year. Cra needs to be reported also but can I claim tax credit on the interest?
nelsona
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Re: Canadian interest

Post by nelsona »

Only the Cdn interest from after your move is to be reported on your Cdn newcomer return; the portion from before your move is not taxable in canada (US residents have 0% NR tax rate on bank interest. As you say, that portion it is taxable in US.

The portion you received AFTER entering Canada is reportable in US and Canada. The Cdn tax attributable to that interest can be used as a tax credit against the US tax on the entire Cdn interest income you report on form 1116.

By the way, US interest you received after move is reported in canada and US as well, with US giving you credit for the *US* tax by the re-sourced by treaty method on another form 1116.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
brianbbc
Posts: 63
Joined: Fri Apr 25, 2014 9:17 pm

Re: Canadian interest

Post by brianbbc »

Thanks for the clarification, unfortunately with the move halfway in the year and change of addresses, my Canadian bank has already sent me t5 forms on interest I got before establishing residency. I am not liable to the cra for that interest, I suppose I will have to include a letter explaining why it's not taxable showing the dates I received the actual interest. It's unlikely I can convince my bank to alter the t5.
nelsona
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Re: Canadian interest

Post by nelsona »

Doesn't matter. They won't change the T5 nor should they. Just file as indicated above.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
brianbbc
Posts: 63
Joined: Fri Apr 25, 2014 9:17 pm

Re: Canadian interest

Post by brianbbc »

Looks like the usa 2020 tax software doesn't allow me to enter my Canadian foreign interest anywhere. I tried a couple well know sites. In 2020, I did have canadian bank interest, and at a point the account balance was over $10000 american. Do I have to file fbar (fincen Report 114) seperately with the IRS now? If so, will they make the adjustment of my Canadian interest to my 2020 tax return later ( seeing I cannot enter it on the software when I file my 1040 for 2020).
nelsona
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Re: Canadian interest

Post by nelsona »

It goes on schedule B along with all other interest. There is no need to make a distinction. You fill the 1116 with the value. That is the place where you designate the income as foreign.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
brianbbc
Posts: 63
Joined: Fri Apr 25, 2014 9:17 pm

Re: Canadian interest

Post by brianbbc »

Thanks for the verification. After studying the tax program, my best guess was scheduled b. As to the fbar reporting, looks like thats all it is, a statement of foreign account; found that you can submit it directly to the IRS.
nelsona
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Re: Canadian interest

Post by nelsona »

To the treasury department, sent completely separate from your tax return. . It is called FinCen now
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
brianbbc
Posts: 63
Joined: Fri Apr 25, 2014 9:17 pm

Re: Canadian interest

Post by brianbbc »

Searched for FinCen now, couldn't find the exact match but can file on line fbar report found at bsaefiling.fincen.treas.gov. looks pretty simple, just file in blanks type information. Thanks
nelsona
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Re: Canadian interest

Post by nelsona »

It is called Fincen now = It is now called Fincen.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
brianbbc
Posts: 63
Joined: Fri Apr 25, 2014 9:17 pm

Re: Canadian interest

Post by brianbbc »

Ok, I'm trying not to feel to stupid. That Fincen does take me to that site I mentioned. Appreciate it.
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