# How to enter US 1099 form info



## nomad

Hi,

I have some US 1099 forms (1099-INT, 1099-B, and 1099-DIV). Would these be all entered as foreign income on Schedules 3 & 4?


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## Karen

You convert the amounts to Canadian dollars, enter them in the appropriate schedules, and then calculate your foreign tax credit using CRA form T2209 and enter that amount in Line 405 of your T1.

You file form T2209 and your 1099s with your tax return.

Edited to add: I should point out that I just noticed that one of your 1099s relates to dividend income. I have no idea how US dividend income is treated under the US-Canada treaty, i.e. whether the special tax treatment of Canadian dividends applies to US dividends as well. Perhaps you know this already but, if not, maybe you should phone CRA and ask. Or maybe someone on the forum can answer that for you.


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## andrewf

How are short-term capital gains taxed for Canadians? Is there a withholding tax? Are they taxed as capital gains (50% inclusion) or as income? Is withholding waived for RRSPs? Frankly, I think the distinction between long and short term capital gains is bizarre and needlessly complicates their tax code. 

I found this thread on the topic but it doesn't seem to have a definitive answer.

http://forums.canadianbusiness.com/message.jspa?messageID=51296


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## nomad

Thanks Karen!

Another question -- do I need to file US taxes at all if I have US income that's filed by US banks/brokerages with IRS?


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## Karen

I don't think so, Nomad, but I'm far from an expert on US taxes.. What I do know I learned because of my own circumstances - I receive US pension and annuity income and I don't have to file US tax returns for that. As long as you're neither an American citizen nor a green-card holder, I'm sure you just file with Canada Revenue. 

I should have been more clear in my first answer; I made an assumption which I shouldn't have made. I was assuming that there was US tax withheld from your US income (there is from mine); if so, it would show in Box 4 of your 1099s (Federal income tax withheld), and that is the amount that you would deduct as your foreign tax credit. If there was nothing withheld and you received the full amount of your interest and dividends, then obviously you didn't pay any US tax, so there would be no foreign tax credit to claim on your Canadian return. I apologize for not being more clear about that.
___________________________

Andrew, I'm sorry but I don't know know anything about how US capital gains are taxed in Canada. I'm sure someone here will be able to give you an answer.


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## nomad

Thanks Karen!

Another question. Does having to file forms 1099 with CRA mean that I cannot use NETFILE?


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## Karen

I filed with TurboTax (formerly QuickTax). I haven't heard back from CRA yet, so I can't swear that I did it right, but I think so. It was a bit more complicated than it was other years when my income was all Canadian, but I managed. Yours should be easier if you have no foreign tax credit to claim - that's what took me a while to figure out.

Don't hesitate to ask me if you run into any problems. I'll help if I can.


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## Newbee

HI,
I have some dividends reinvestments on form 1099-DIV as well. When I report the income and taxes withheld on T1 on TurboTax, a reminder appears on the software for me to check if I'm entitled to Sec 20 (11). FTC worksheet calculates this amount automatically on TurboTax. How do I check the calculation or if I'm really entitled to it? Any advice would be greatly appreciated.


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## tim_yonkers

I had problem with my 1099-PATR and SSA-1099 form and then I calculate my foreign tax credit by CRA form T2209. Taxable Distributions Received From Cooperatives form refers to income received from a farm, when it is operated as a business of which I own a portion of the equity.


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## Eclectic12

Karen said:


> nomad said:
> 
> 
> 
> ... I have some US 1099 forms (1099-INT, 1099-B, and 1099-DIV). Would these be all entered as foreign income on Schedules 3 & 4?
> 
> 
> 
> ... Edited to add: I should point out that I just noticed that one of your 1099s relates to dividend income. I have *no idea how US dividend income is treated under the US-Canada treaty, i.e. whether the special tax treatment of Canadian dividends applies to US dividends as well.*
Click to expand...

All the articles I have read as well as the Canadian gov't web sites say that what gives a company the ability to pay some/all of their dividends as eligible, which has the special tax treatment by the Canadian tax system is that it is a Canadian corporation. A "US dividend" implies that the source corporation is a US one, which rules out the special tax treatment. https://www.canada.ca/en/revenue-ag...s/topics/corporations/eligible-dividends.html

Keep in mind that some Canadian corporations choose to pay their eligible dividend in USD but the currency paid does not change where an eligible dividend can be paid or whether the corporation has chosen to pay one.


As for how the Canada-US treaty applies, my understanding is that this likely will change based on tax residency. 

Where one is a Canadian tax resident but not a US one, the impact of the Canada-US tax treaty is to reduce the non-resident withholding tax the US charges of 30%, where the paperwork was filed to to identify one as a Canadian tax resident down to 15% in a taxable. For investments held in an RRSP, the US withholding tax is waived completely.

The US is not involved for capital gains ... only the Canadian tax system.


Where one is a US citizen or similar US person so that a US tax return that reports one's world wide income is required, parts of the Canada-US tax treaty that do not apply to a Canadian only tax resident may be needed. 


Cheers


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## Eclectic12

Karen said:


> ... I should have been more clear in my first answer; I made an assumption which I shouldn't have made. I was assuming that there was US tax withheld from your US income (there is from mine); if so, it would show in Box 4 of your 1099s (Federal income tax withheld), and that is the amount that you would deduct as your foreign tax credit. If there was nothing withheld and you received the full amount of your interest and dividends, then obviously you didn't pay any US tax, so there would be no foreign tax credit to claim on your Canadian return ...


My understanding is that where one is solely a Canadian tax resident, the financial institutions will know one is not a US resident so that the US withholding tax will be applied, according to the US rules that start at 30%. Filing the paperwork with those institutions (or having them file for one), means the appropriate reductions that the tax treaty provides will be applied.

Where one is not seeing the non-resident withholding tax applied then one is likely considered or showing up as a US tax resident. Like when I worked five months in the US, this means filing two tax returns, one for the US and one for Canada. It also makes the what to claim on which tax return and what tax treaty benefits available a lot more complicated.


Cheers


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## Eclectic12

andrewf said:


> How are short-term capital gains taxed for Canadians? Is there a withholding tax? Are they taxed as capital gains (50% inclusion) or as income? Is withholding waived for RRSPs? Frankly, I think the distinction between long and short term capital gains is bizarre and needlessly complicates their tax code ...


I assume "their tax code" means the US tax code. The key question AFAICT is are you considered a US tax resident?


If not, tax books/articles/threads here on CMF say that for regular investments, the US will take withholding tax on dividends/income but nothing for CG, which makes the US tax code for CG irrelevant. Note that there are some wrinkles such as buying a Master Limited Partnership instead of run of the mill US stock that pays dividends means a higher withholding tax rate plus does not have the tax treaty exemption for RRSPs. http://www.dividendninja.com/mlp-taxation-in-canadian-accounts/

On the Canadian side, taxes on dividends paid as well as CG on selling will apply but the rules stay the same. For example, if the CG qualifies as CG instead of business income - then the going inclusion rate (currently 50% applies). The tax rate on the dividend income is higher but the process is the same.
http://www.taxtips.ca/personaltax/investing/taxtreatment/shares.htm (see "Shares in Foreign Corporations" section).
http://www.taxtips.ca/personaltax/investing/taxtreatment/capitalorincome.htm
http://www.taxtips.ca/filing/foreigntaxcredit.htm


I say "regular investments" as buying vacation property means having to pay US capital gains/withholding tax on the sale.
http://www.wolrigemahon.com/tax-implications-canadian-owning-u-s-vacation-property/


If you are a US tax resident due to having a green card, being a US citizen or passing the substantive presence test (without claiming a closer connection to Canada via the tax treaty), then the US CG rules as well as filing a return plus possibly foreign bank account reporting (FBAR) may come into play. In that case, help from an expert is likely of benefit.


Cheers


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