NR4 from Canada

You should post an NR4 as a Social Security transaction.

1.  Boxes 16 & 17 are all you will need. 
   1. Enter the NR4, treat it as if it is an SSA-1099
   2. Enter it in the Retirement Plans
   3. Social Security section, under ‘Social Security (SSA-1099, RRB-1099)’.
   4. Then, go to the Deductions and Credits 
   5. Select Foreign Taxes under ‘Estimates and Other Taxes Paid’ 
   6.  enter any foreign tax you already paid to Canada on that income.
   7. For more info specific to the US/Canadian tax treaty, please see http://www.irs.gov/pub/irs-pdf/p597.pdf
2. Currency exchange may not have been updated for 2022 yet, but they will be published here:  Yearly Average Currency Exchange Rates - IRS  
3. There is no TIN for Social Security.
4. You should combine all of the NR4's together.

@JohnB5677 I went in to add SSA-1099 and it states:

Don't confuse the SSA-1099 with the 1099-R that reports retirement benefits from non-SSA sources like pensions, 401(k)s, and IRAs. 1099-Rs are entered elsewhere in TurboTax. As I mentioned in my original post the codes are 40 and 61. This is not retirement benefits.

40 is lump sum payment of pension benefits

61 is arm's length interest payment

These are both inheritance from my mother who passed in Canada. It was her pension that I inherited and the interest is on an insurance policy I received.

Can you please confirm as the SSA-1099 doesn't sound correct based on the info I read above.

Please see this Turbotax FAQ. It will confirm that the SSA-1099 is the right way to go.

@BillM223 I just spoke to multiple "tax experts" after upgrading my account and they said it's SSA-1099 for code 39. I do not have code 39. They said for code 40 it's 1099-R and code 61 it's 1099INT.

I'm really concerned that I'm being given such different information depending on who answers. It makes it very difficult to trust that I'm going to do this correctly. 

Canada says, 

"39 - Superannuation or pension benefits – Periodic payments

40 - Superannuation or pension benefits – Lump-sum payments"

Since both of these are government "pension" payments, using form SSA-1099 is a closer fit than a 1099-R. Besides, there is a tax benefit from using the SSA-1099, because SS payments are never taxed at 100%.

The form with code 61 should be treated as if it were on a 1099-INT, since it is "61- Arm’s length interest payments". (See the "Canada says" link above).

You also asked about what exchange rate to use. The IRS generally says that whatever exchange rate you use, you have to be able to justify it. John's link above is a solid choice - it is the IRS's own listing of average exchange rates.

I will ask that the FAQ be updated to reflect the different answers based on the codes on the Canadian forms.

Thank you @BillM223 so my next question, should I be getting money back? I thought that money was gone forever but when I plugged in those numbers (see below) I'm getting a over $20,000 of it back. I'm nervous. I've never paid someone to do my taxes but I think with these numbers I'm a little more nervous than usual.

One of the other knowledgeable posters may return shortly with some specifics (and I need to refrain from commenting on actual foreign tax forms and systems, as that’s out of my area). But I can say that the SSA-1099 box 6 field you’re seeing in TurboTax is only for amounts that have been withheld and remitted specifically to the U.S. Treasury, and definitely not for amounts withheld by a foreign government for its own treasury.

Actual foreign withholding normally would be either refunded or not within the context of their system, with a possible “Foreign Tax Credit” here (as JohnB5677 wrote) for what the U.S. resident ends up paying there on double-taxed income, after the dust clears. (You may already be on top of this, calums_mom, but I thought I’d throw it out there just in case!)

@RalphH1 thank you,  there should be somewhere to put foreign tax paid and since each code on the back of an NR4 indicates something different there should be a way to specify this is inheritance not just foreign income which is also provided on the same form. 

To follow up on Ralph's response, as he said, money withheld on NR-4 goes to Canada. 

This requires filing in Canada to get a refund or claiming a tax credit on the US return for any amount that isn't refundable. 

Options:

1. I don't know if you are filing a return in Canada, for yourself or for your late mother's estate. If so, apply these NR-4 forms and see if an adequate amount is refunded to you.

2. If not filing in Canada, file in Canada using the NR-7, Application for Refund Part XIII Tax Withheld. Note the instruction on page 2: "Non-Residents of Canada Applicant • The only person/entity entitled to the refund is typically the beneficial owner. A refund will only be issued in another name, if a qualifying situation arises (e.g., partnership, multiple beneficial owners, Canadian Securities Dealers etc.). One (1) NR7-R application per year, per income type, per beneficial owner, per Canadian payer or agent's non-resident tax account number is required."

3. Otherwise, on your US return, for any tax paid in Canada (less amounts refunded to you in options 1 and 2), you can claim the Foreign Tax Credit. This is because as a U.S. citizen, you have to report this income on your return in any case, and the Foreign Tax Credit can be used to "pay off" the tax due.

I realize that that doesn't answer your question about "Do I get any money back", but we do not have enough information about your situation to be able to say.

So here's the story with this. If you are reporting the income as 1099 SSA, there is nowhere to report that this as inheritance income become SS benefits are benefits that are paid directly to you. If you wish to report the foreign income as inherited income, then you would repoort it as 1099R. When you type in Search 1099R, then jump to 1099R. When you get to the screen where they ask you to input your information, you would choose code 4- Death like this

then continue to the screen till where it says Tell Us when this person was born like this

@calums_mom

As far as entering the code 40 for the foreign tax withheld, see HERE 

https://ttlc.intuit.com/community/retirement/discussion/received-nr4-from-canada-with-code-40-living-in-the-u-s/00/1089083     

@calums_mom

As far entering the code 61, simply enter as interest income under 1099INT

[Edited 01/31/22|4:15 pm PST]

Thank you @BillM223 I will not be filing in Canada as this is the only tie I have to Canada. I have no reason to be filing there other than this inheritance. I don't really care if I get money back. I just want to do this right. I've been told way too many different ways to file this and multiple forms, one way I'm getting back 60% of what I paid to Canada and one way I'm owing $20,000 to the IRS. I've called a few CPAs locally and can't find anyone with experience with these NR4 forms and since ultimately I'm liable for this I'm not sure how to proceed. Even with Upgrading my turbotax they couldn't help.

@AbrahamT  unfortunately only one of those images came though and the link doesn't work. Would you mind trying again? Thanks 🙂

There is a place in TurboTax to enter income from a Canadian pension.  

To enter Canadian RRSP information, go to:

• Across the top, select tab Federal taxes / Wages & Income 
• Scroll down to Retirement Plans and Social Security / Canadian Registered Pension Income, select Start

This creates a Canadian Registered Retirement Plans Worksheet.  You will be able to indicate that you were the 'beneficiary' of the funds from the questions in TurboTax.

Basically, you want to report the income, but you also want to report the Canadian Tax paid (in the Foreign Tax section), so the US will not tax you again on that portion.

@calums_mom Would you mind sharing what your resolution to this was? I am in the EXACT same boat, but for far less money.

The NR4 represents many types of income. You want to enter the income in the same spot as the U.S. equivalent - pension, dividends, etc.

All foreign tax paid is entered in the same spot. To report the foreign tax paid on your pension for foreign tax credit:

1. Enter foreign tax credit in the search box at the top of the page and click the Jump to link
2. Select Yes you paid foreign taxes
3. Continue through the screens regarding foreign interest and dividends
4. Select yes that you have reported all your foreign income already in TurboTax
5. Deduction or Credit? Most people choose the credit since so few itemize deductions. You can try it both ways and determine what is best for you. Select an option.
6. Answer question about the Simplified Limitation Election
7. Choose income type 
8. Add the name of  your county, Canada
9. Enter description -
10. Enter Income amount that you previously reported in another section of TurboTax 
11. Enter your taxes you paid on your foreign pension in the box "Other income"
12. Continue through the foreign tax credit screens until done.

@dgelineau If this does not satisfy your needs, please reply back with more information. 

@dgelineau I wish I could say yes but I can't. I am in the process of starting my taxes over again with a local CPA. As you can see from the thread non of the TT "experts" knew the answer since they were all different. One would mean I owed nothing, one meant I owed thousands and one way meant I would get back over $20,000. Insane that not one of them knew the answer.

Hi JohnB5677 - I have a NR4 with Income Code 27 from Canada (income from an investment account my father--in-law had who passed last year). How do I report this income and taxes in Turbo Tax? Thanks in advance! 

To enter this NR4 you should:

1. Click on Wages & Income at the top of the page
2. Scroll down to Retirement Plans and Social Security
3. Scroll down to Canadian Registered Pension Income
4. Click Start and enter your income

To report your Canadian tax paid on your retirement for foreign tax credit:

1. Click on Deductions & Credits
2. Scroll down to Estimates and Other Taxes Paid
3. Scroll down to Foreign Taxes
    
4. Click 'Yes" you paid foreign taxes
5. Click through the screens regarding foreign interest and dividends
6. Click yes that you have reported all your foreign income already in TurboTax
7. Click that you want to take a credit
8. Answer question about the Simplified Limitation Election
9. Choose income type for pension - it will be Passive income
10. Add Canada as the country
11. Enter description -Canadian RRIF
     
12. Enter Income amount that you previously reported in TurboTax
13. Enter your taxes you paid on your foreign retirement in the box "Other income"
14. Continue through ALL the foreign tax credit screens until done.

Hello @LindaS5247, and @AmyC :  I was reading the post from last year, I also have NR4 withe income code 39.  I treat the NR4 as if it is a SSA-1099 and entered it in the Retirement Plans and Social Security section, under ‘Social Security (SSA-1099, RRB-1099)’, however,  I am having issues on the "Deduction" of the Foreign Taxes part,  under the deductions&credits, Foreign Taxes I selected "tax credit",  which takes me to questions for form 1116, and I am not sure what to choose for "Income Category Type".  Is that the correct way? if so, what is the "Income Category Type"? Any help is greatly appreciated.

Tax credit is usually better than deduction. You can try it both ways, if you itemize, to see which is better. Your income type is general income. See Claiming the Foreign Tax Credit with Form 1116 - TurboTax

@fredk99