Do I need to report stocks dividends on 1040NR if withholding already applied?

[heiwang88]

Hello,

I am a Cdn citizen living in Canada who will be filing a 1040NR this year. I gave up my green card Jan last year, and I do not meet the criteria for the exit tax. I have US rental incomes and some W2 income from stock grants from previous years.

I have transferred my brokerage account to RBC and updated my status as a Non-US person. As such, any dividends I received last year already had a 15% tax withholding. I was wondering if such dividends income needs to be reported on my 1040NR, since they're technically "US-sourced"?

[nelsona]

Yes, you report them on the NEC page under dividends, and use the 15% rate. Include the 15% in your tax paid line.

If you were not filing a 1040NR, you would not need to report these.

[heiwang88]

Thanks Nelsona. I tried this but it's not letting me e-file the return because it expects a 1042-S with a matching withheld value. My canadian broker didn't issue a 1042-S to me (only a T5 with the foreign tax paid amount on Box 16). Not sure if I should "convert it" into a 1042-S by manually inputting eqv fields, or file by paper. Any suggestions here? Thank you!

RETURN NOT ELIGIBLE FOR E-FILE: IRS Business Rule "F1040NR-020" states that the following amounts must equal the amount on line 25g, "Form(s) 1042-S," of Form 1040-NR; otherwise, the return will be rejected: - Line 9, "Net tax withheld during 2023," of all Forms SSA-1042S (use line 7, "Amount of tax withheld," if line 9 does not have a value) - Line 10, "Total withholding credit," of all Forms 1042-S - Line 13, "Federal tax withheld," of all Forms RRB-1042S If you made any adjustment to a "Tax withheld" amount on screen NR2 (Schedule NEC) that caused these amounts to not be equal, this return must be paper-filed unless further adjustments correct the inequality.

[nelsona]

Not every return can be efiled.

You could create a 1042-S slip but I beleive this requires a code of the slip.

Mail it in.

[heiwang88]

Thanks Nelsona! The slip wasn't available online, but I contacted my bank (RBC) and they were able to provide me a 1042-S slip.

Others can try the same if they're running into the same issue.

[ArvillaKovacek]

You still need to report dividend income from US stocks, even if the 15% tax has been withheld under the US-Canada Tax Treaty. Although the tax has been withheld, you must declare the entire dividend income on your return to ensure compliance with tax regulations. You can then claim a deduction for the tax paid to avoid double taxation. This helps ensure that you do not have to pay additional tax on this income.