Taxation of Canadian Mutual Funds for US Resident

duncf · Post by **duncf** » Sat Mar 14, 2009 5:53 pm

Hi,

I moved to the USA in 2007. I continue to own a certain amount of Canadian mutual funds through Mclean Budden. They sent me a T3 and an NR4 for 2008, but I'm not sure how to report this income on my 1040. (Ideally using Turbo Tax.) The numbers on my T3 and NR4 seem completely different, and don't really match up well to a 1099-DIV.

The "income code" on the NR4 is 11 - "Estate and Trust Income".

I appreciate any advice or suggestions.

Thanks

nelsona · Post by **nelsona** » Sun Mar 15, 2009 1:37 pm

What do you mean "seem completely different"?

Regardless if you can 'fit' these onto a 1099-DIV, the income is reportable on your 1040 as dividends and/or income.

As you may have also noticed, IRS views your mutual funds as a trust, so now you are subject to trust reporting, on Form 3520 and perhaps others.

duncf · Post by **duncf** » Sun Mar 15, 2009 2:23 pm

I'm just saying I don't see how the NR4's "Gross Income" line matches up to the boxes on the T3. I think I might have to check with McLean Budden -- it could be they sent me the T3 for the first part of the year and the NR4 for the rest.

I've noticed that CRA treats the mutual funds as an investment trust -- but I've also read some thing suggesting that the IRS might not take the same view. Any ideas there? Hopefully I don't have to file 3520 -- Turbo Tax won't help me with that. :-)

Thanks!

nelsona · Post by **nelsona** » Sun Mar 15, 2009 3:44 pm

Oh, certainly if they sent you 2 forms for the year on the same investments, then the T form is for the first part of the year and the NR is for the second. But you said you moved in 2007, so you would have informed them then that you were non-resident, no?

nelsona · Post by **nelsona** » Sun Mar 15, 2009 3:53 pm

The advice from this corner is ALWAYS to divest oneself of all non-RRSP mutual funds as one leaves Canada, since they are subject to demmed disposition in any event, and aren't tradeable anymore, and open one up for trust reporting issues, as well as tax incongruities.

I think you see that now.

duncf · Post by **duncf** » Sun Mar 15, 2009 7:13 pm

[quote="nelsona"]Oh, certainly if they sent you 2 forms for the year on the same investments, then the T form is for the first part of the year and the NR is for the second. But you said you moved in 2007, so you would have informed them then that you were non-resident, no?[/quote]

I don't think I remembered to do that until I was doing my taxes last year, so that makes sense. :-S

Thanks