Question about reporting and paying 1099-DIV taxes

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.

Moderator: Mark T Serbinski CA CPA

Post Reply
lanman2000
Posts: 137
Joined: Wed Jul 29, 2009 8:30 am

Question about reporting and paying 1099-DIV taxes

Post by lanman2000 »

Dual US / Canadian citizen
Resident in Canada
US Brokerage account that is paying dividends throughout the year and there is a 1099-DIV for

Questions:
1) I assume all dividends get reported on both US and Canadian tax returns
2) Do "qualified dividends" get reported differently on the Canadian return to ensure the lower tax rate?
3) Does one country get first right of taxation for this income (and if so I guess then the FTC can be calculated from there)? Or can i simply put on Canadian return and pay all the tax to Canada which would be MUCH easier to figure out but probably more costly tax wise?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Question about reporting and paying 1099-DIV taxes

Post by nelsona »

FYI, Cdn residents -- even US citizens -- are to be serviced by US brokers; violates Cdn securities regs. One needs to transfer the assets to Cdn broker, or one licensed in both countries.

1, Of course, You must report world income in both countries.
2. Foreign dividends do not qualify for the DTC.
https://www.canada.ca/en/revenue-agency ... dends.html
3. US dividends get taxed first by US. Any tax less than 15% can be claimed on your Cdn return as a foreign tax credit. Since these dividends were treated specially in US, you will need to determine the actual taxrate you paid in US on those, if any. It cannot be more than your effective tax rate on all income.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
lanman2000
Posts: 137
Joined: Wed Jul 29, 2009 8:30 am

Re: Question about reporting and paying 1099-DIV taxes

Post by lanman2000 »

To clarify did you mean to say "are NOT to be serviced by US brokers"? Rest of the answer was great thanks.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Question about reporting and paying 1099-DIV taxes

Post by nelsona »

Yes, NOT to be serviced ....
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
lanman2000
Posts: 137
Joined: Wed Jul 29, 2009 8:30 am

Re: Question about reporting and paying 1099-DIV taxes

Post by lanman2000 »

nelsona wrote:
> FYI, Cdn residents -- even US citizens -- are to be serviced by US brokers;
> violates Cdn securities regs. One needs to transfer the assets to Cdn
> broker, or one licensed in both countries.
>
> 1, Of course, You must report world income in both countries.
> 2. Foreign dividends do not qualify for the DTC.
>
> https://www.canada.ca/en/revenue-agency ... dends.html
> 3. US dividends get taxed first by US. Any tax less than 15% can be claimed
> on your Cdn return as a foreign tax credit. Since these dividends were
> treated specially in US, you will need to determine the actual taxrate you
> paid in US on those, if any. It cannot be more than your effective tax rate
> on all income.


3. Is confusing to me now I reread it. If I can only use up to 15% why do I need to calculate the actual tax rate. Isn't it 15% ?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Question about reporting and paying 1099-DIV taxes

Post by nelsona »

Because you are only allowed to claim a credit on the actual taxes attributed to that income. You can't claim 15% if you didn't pay 15%.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Post Reply