Husband cashed out Canadian Penison

KevMontana · Post by **KevMontana** » Tue Feb 24, 2009 11:05 pm

Thank you for the advice again...

You could use the 6000 tax as a deduction rather than a credit on your return, that would definitely reduce your state tax.

I believe you said u meant the 4000 NR tax paid but where would I put it (what line)on a schedule a for the state return? Can I put the NR tax paid ...4000 CDN converted to us amount and then use it on a schedule A form for the IRS instead of that 1116 form for a tax treaty credit?

Thank you as always.

Best,

Kev

nelsona · Post by **nelsona** » Tue Feb 24, 2009 11:26 pm

Isn't that what I said? You put it on shedule A, it will then automatically count as a deduction on your state return (almost all states accept your IRS deductions with minor changes).

Ill let you figure out what line it goes. I'm quite sure it's crystal clear in the Schedule A instructions.

KevMontana · Post by **KevMontana** » Wed Mar 04, 2009 9:28 pm

Okay so I used Turbo Tax and did it both ways as you described. Turbo Tax warns to use either the credit or deduction but not both.

As mentioned above I ended up with a $610 credit transferred to the 1040. This gave me a balance of about 3500 refund on the Fed...$1100 owing to the state.

Then I tried it the other way with the deduction method and as u said..the state dropped to about $800 owing BUT the Fed refund also dropped along with it by almost $700.00 to a refund of only $2800!

Looks like the 1116 and credit is the way to go...these figures sound about right as to what I've done?

Appreciate the feedback as always...

Best,

Kev

nelsona · Post by **nelsona** » Thu Mar 05, 2009 6:32 am

You said the 1116 yeilded a $650 credit. Then how, if you forego the credit, does you pay more $7000 tax by adding a huge deduction. Is it possible that you don't meet the minimum on the Schedule A? Are you using all deductions available to you, like your state tax, your property tax.

It looks like you are getting nothing from schedule A other than your standard dedcution.

nelsona · Post by **nelsona** » Thu Mar 05, 2009 6:43 am

I meant $700.

KevMontana · Post by **KevMontana** » Thu Mar 05, 2009 9:46 pm

I am renting a place and hoping to buy a home this year. So property taxes are out etc.......I'm looking for deductions on the Schedule A Federal form but other than 800.00 prescription not much..

What is confusing is TurboTax says "if u claimed foreign taxes as an itemized deduction on your federal return. they are allowed in full on your oregon return. The amount shown on your federal Schedule A is not subject to the $3500 limit. If you claimed the foreign taxes as an itemized deduction, you may also claim them as a subrtaction."

All I have on Federal Schedule A is the 800.00 for medical which netted $0...,line 5 for state taxes paid which is $1600....and line 8 $3,380.00 for the foreign taxes paid.... so this was done on the Fed schedule A but I have no idea what Turbotax is talking about putting them "in full on your oregon return."

Best,

kev

nelsona · Post by **nelsona** » Fri Mar 06, 2009 6:03 am

To explain the oregon statement: most states simply take the schedule A value as the state deductions. Oregon allows foreign taxes as a subtraction instead.

The trouble with that statement is, in your case, it doesn't help you to take the foreign tax as itemized on your fed return. It is clearly better to take the credit.

So, you'll need to find out how Oregon treats foreign tax that you take as a credit rather than a deduction on your 1040. I don't delve into state tax issues.

KevMontana · Post by **KevMontana** » Sun Apr 05, 2009 9:24 pm

Hi Nelsona,

I am finishing up and getting ready to file...One thing that bothers me is I mentioned above that I at 43 got a pension lump sum payment from Canada Post to start this thread...I swear somewhere I asked you in another thread which category of the 1116 Form to use and you said the General category correct? They sent me NR4 forms to use for taxes.Choices are 1. Passive 2. general 3.Section 901 4.Certain Income Resourced by Treaty 5. Lump Sum distributions.

I looked up the Lump sum category and it got into using form 4972 if you were born before 1936 etc...

I hope I did it right with the General category...

Best,

Kev

nelsona · Post by **nelsona** » Mon Apr 06, 2009 5:23 am

General.

KevMontana · Post by **KevMontana** » Mon Apr 06, 2009 8:03 pm

Thank you Nelsona..Well it looked like I had it ready to go....but I noticed that the one time pension sum I received and used on the 1116 appeared on line 21 of the 1040 as other income. Does this have to go on the above mentioned line 15 or line 16? I am using TurboTax for these calculations and does that mean I have to fill out a 1099R now? Sigh...

Best,

Kev

nelsona · Post by **nelsona** » Tue Apr 07, 2009 5:06 am

it is pesion income, and should go on 16. You fake a 1099-r

KevMontana · Post by **KevMontana** » Tue Apr 07, 2009 2:05 pm

I was able to do that on line 16 by only filling in Gross distribution and Taxable amount on line 2a of the 1099R. Is that correct? I would assume that is it since it is a CDN pension I wouldn't have to fill out anything else on the 1099R.

BTW... I am NOT filing electronically so do I have to include the 1099R with a paper filing? I really don't want to send a "fake" 1099R with my tax return LOL

Other than that...I think everything looks good thanks to your patience and help. Thank you very much.

Best,

kev

nelsona · Post by **nelsona** » Tue Apr 07, 2009 3:05 pm

IRS is only intersted in slips which show US tax withheld. Your fake 1099R doesn't fall into that category.

Be sure that no penalty was added to your taxes for 'early withdrawal' of pension. This sometimes happens when software sees this pension income if you are under age.

KevMontana · Post by **KevMontana** » Wed Apr 08, 2009 9:29 pm

Thank you...If they only need to see USA tax withheld .then do I have to include the NR4 slip from Rev Canada that showed the CDN pension and tax paid in Canada to the IRS?

Best,

Kev

nelsona · Post by **nelsona** » Thu Apr 09, 2009 5:30 am

No. The NR tax was not paid to the IRS, it was paid to Rev Canada. IRS had nothing to do with that.