Paying US taxes on Canadian Military pension
Moderator: Mark T Serbinski CA CPA
Paying US taxes on Canadian Military pension
I am a Candian citizen living in the US as a permanent resident. I receive a military pension and pay 15% tax to Canada before I receive the pension. I have always treated this as just foreign income and claimed the tax credit but I'm not sure that is the right approach. Seems like I never get full credit for the taxes paid either for the past few years. Should I be claiming this as pension income on line 16a of my 1040 and when I do this in TurboxTax it asks me how much tax was paid which implies it was paid to the IRS. Do I put the income in line 16 then calculate the credit using form 1116? Any help is appreciated.
The pension gets included on 16a and 16b (it ius all taxable in US), and the 15% tax is used on 1116. You do not include the CDn tax anywhere else but on 1116.
It is typical that not all of the 15% tax is absorbed on 1116, and you have carryforwrd to use, as well as paying a little tax to US. That is the nature of foreign tax credits.
It is typical that not all of the 15% tax is absorbed on 1116, and you have carryforwrd to use, as well as paying a little tax to US. That is the nature of foreign tax credits.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best