Canadian interest
Moderator: Mark T Serbinski CA CPA
Canadian interest
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?
Re: Canadian interest
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.
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.
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Re: Canadian interest
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.
Re: Canadian interest
Doesn't matter. They won't change the T5 nor should they. Just file as indicated above.
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Re: Canadian interest
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).
Re: Canadian interest
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.
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Re: Canadian interest
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.
Re: Canadian interest
To the treasury department, sent completely separate from your tax return. . It is called FinCen now
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Re: Canadian interest
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
Re: Canadian interest
It is called Fincen now = It is now called Fincen.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Re: Canadian interest
Ok, I'm trying not to feel to stupid. That Fincen does take me to that site I mentioned. Appreciate it.