My_question_is: US-specific
Subject: NR-4 income on U.S. Tax return
Expert: taxman at centa.com
Date: Tuesday August 08, 2006
Time: 08:07 PM -0700
QUESTION:
How do I report income shown on the Canadian NR-4 and withholdings on a U.S.
tax return?
---------------------------------------------------
david ingram replies:
It would depend upon what the NR4 was issued for. If it was for interest,
it would go on the top part of Schedule B and again on Schedule 1116 as
passive income.
If it was for dividends, it would go on schedule B in the bottom half and
again on schedule 1116 under passive income.
If it was for rent, it would go on schedule E and again on schedule 1116
under passive income.
If it was a royalty, it would also go on schedule E and again on Schedule
1116 under passive income.
The tax deducted would go on Schedule 1116. The tax deducted for interest
would go under interest, the tax deducted for dividends would go under
dividends, the tax deducted for rent would go under rent and tax deducted
for royalties would go under "other".
If you have a total of more than $10,000 US in all of your foreign (i.e.
Canadian) accounts, you must also fill out schedule TDF 90-22.1 for each
account no matter what the balance. Note that the US penalties for not
filling out schedule T DF 90-22.1 is up to $500,000 PLUS five years in jail.
You can find a reference to the form in the bottom two questions on schedule
B where the questions are asked about foreign accounts and foreign trusts.
If you have a Canadian RRSP, that is a foreign trust and you must fill out
form 8891.
Now, in truth, I have never seen anyone penalized for not filling out form
8891 or conforming to its predecessors, Rev-Proc 89-45 and 2002-23. The
official penalties are 35% of the money in the RRSP plus 5% for each year
you did not report.
However, the RRSP also requires one of those T D F 90-22.1 forms and I HAVE
seen a 105 year old lady get a $10,000 fine and a 68 year old lady get a
$60,000 fine and a jail sentence for six months (she only served a day I
understand). AND, AND, AND, over 1,000 Americans are been fined because they
dealt with a US citizen/Vancouver consultant named Jerome Schneider. Jerome
was telling his clients NOT to fill out the forms while he set them up with
offshore accounts.
When Jerome Schneider was arrested while visiting in San Francisco, he plea
bargained a very large possible sentence into a $100,000 fine and 18 months
by turning over some 1072 clients and the lawyers and accountants who had
helped him.
so fill out the forms and if you need help, you know where we are.
------------------------------
David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at:
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 10 PM 7 days a week Vancouver (LA) time -
(please do not fax or phone outside of those hours as this is a home office)
email to taxman at centa.com <mailto:taxman at centa.com>
www.centa.com <http://www.centa.com/> www.david-ingram.com
<http://www.david-ingram.com/>
Disclaimer: This question has been answered without detailed information or
consultation and is to be regarded only as general comment. Nothing in
this message is or should be construed as advice in any particular
circumstances. No contract exists between the reader and the author and any
and all non-contractual duties are expressly denied. All readers should
obtain formal advice from a competent and appropriately qualified legal
practitioner or tax specialist for expert help, assistance, preparation, or
consultation in connection with personal or business affairs such as at
www.centa.com <http://www.centa.com> . If you forward this message, this
disclaimer must be included."
Be ALERT, the world needs more "lerts"
David Ingram gives expert income tax & immigration help to non-resident
Americans & Canadians from New York to California to Saudi Arabia to Mexico
to China or Chile - Cross border, dual citizen - out of country investments
are all handled with competence & authority.
What's Related