Cad-USA taxes on bank interest based on residency?

[LJBill]

Phil Hogan, a BC-based cross-border tax/finance guy, states in an article at LinkedIn (https://www.linkedin.com/pulse/what-tax ... year-phil/) "Interest will only be taxable in the country you are a resident (Article XI)"

My wife and I are both residents of Canada (both US citizens, I am a Canadian PR and she is a Canadian citizen). We were not residents of the US for any portion of 2023. I am trying to unpack Hogan's statement above and how it applies to our situation.

For 2023 we have a small amount of interest on a US account and we had a fair bit of interest on Canadian bank accounts. Do I understand correctly that because we are residents of Canada only, then (i) the Canadian interest income is not to be taxed by the US? and that (ii) the US interest is taxed only by the CRA? Or am I misunderstanding this issue?

Thank you.

[LJBill]

The link to the article was broken, this is it: https://www.linkedin.com/pulse/what-tax ... year-phil/

[nelsona]

Neither ends up being taxed by IRS . however, by procedure both are reported, and then credit is taken by using form 1116: Cdn interest by a passive 1116, and US interest by a re-sourced by treaty 1116.

One cannot simply not report the income.

[nelsona]

You will note that the statement Phil makes is under the heading of foreign tax credits.

[LJBill]

@nelsona

Thank you Nelson. I am much obliged. Your explanation is entirely clear (unlike the tax forms and the Treaty itself !) and is very very helpful.