Hello,
Canadian residents can take advantage of the "enhanced dividend tax credit." (i.e., the effective Canadian marginal tax rate for eligible dividends is quite a bit lower than the marginal tax rate for employment income, interest and foreign dividends. It is also lower than the marginal tax rate for capital gains, but only to a certain level of taxable income.). How does that work for US/Canadian cross-border individuals (i.e., individuals filing both US and Canadian taxes)? In other words, I am wondering whether the benefit of the lower effective tax rate (for example, on dividends paid by Canadian bank stocks held in a non-registered account in a Canadian brokerage account) relative to bank account interest income would be negated/lost when filing US tax returns?
Enhanced dividend tax credit in Canada
Moderator: Mark T Serbinski CA CPA
Re: Enhanced dividend tax credit in Canada
It isn't "lost", however, you do have less Cdn tax to use against the US tax you owe on those foreign dividends. The US taxrate is usually low enough not to matter however.
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