Foreign tax paid on T3 slip - US tax withheld?

mackayr · Post by **mackayr** » Tue Aug 30, 2011 10:52 am

I've got a client (US citizen) with over $1,000 US tax withheld per his T3 slip. Can this be included as "Federal income tax withheld" on his US 1040?

nelsona · Post by **nelsona** » Tue Aug 30, 2011 12:01 pm

Yes. It is tax that was remitted to IRS.

I thought Cdn firms with US citizen clients has started issuing K1's?

mackayr · Post by **mackayr** » Tue Aug 30, 2011 12:36 pm

[quote]I thought Cdn firms with US citizen clients has started issuing K1's?[/quote]

Are you suggesting that the investment firms have started issuing K-1's (in lieu of, or in addition to the T3 slips)? If so, perhaps I should touch base with them and suggest that.

nelsona · Post by **nelsona** » Tue Aug 30, 2011 2:04 pm

In addition to. I'm only asking the question.

In fact, if the taxpayer supplies proper identification as a US person, (on a W-9), the firm should stop withholding IRS tax altogether. This would give him a better return on his investment as none would be coming out for taxes (that are likely to be refunded anyways).

Us citizens pay tax on investments on thier 1040, not typically by having tax withheld. That is for non-residents.

A US citizen should ALWAYS identify himself as such when dealing with any broker, for this reason, and others.

mackayr · Post by **mackayr** » Tue Aug 30, 2011 2:31 pm

I haven't seen K-1's for any of my clients, except those that belong to partnerships in the US. I think the K-1's are only for partnerships and such.

Regardless, I think you're absolutely correct with respect to the withholding. As a US citizen, he really shouldn't have US withholding on those dividends. I'll contact the client's broker and inquire. I know that they (at the local office level) know that he's a US citizen, but it certainly appears that they may not have this recorded properly with his investments.

Thanks,

Rob