topic Reporting Canadian RRSP Withdrawl on US Taxes in Retirement tax questions

Reporting Canadian RRSP Withdrawl on US Taxes

bcselin — Mon, 09 Mar 2026 06:26:16 GMT

I am a US citizen and last year I had a withdraw from my Canadian RRSP. When I go to enter it under Wages and income I am not sure what the difference is between Total Distribution and Taxable Part of Distribution. For an example if my total withdraw was $10000 and the Canadian government withheld $2500 (25%). What would I enter in turbotax for each of the distribution entries?

Also should I also be filling for a foreign tax credit on my taxes this year?

Any help will be greatly appreciated in understanding this tax entry.

Re: Reporting Canadian RRSP Withdrawl on US Taxes

MarilynG1 — Fri, 04 Feb 2022 20:47:10 GMT

Enter your Total Distribution as $10,000 and the Taxable Distribution as $7,500.

You are not required to claim the Foreign Tax Credit, but you may want to if it is beneficial to do so.

Click this link for detailed instructions on Entering your Canadian RRSP and Claiming the Foreign Tax Credit.

Re: Reporting Canadian RRSP Withdrawl on US Taxes

bcselin — Fri, 04 Feb 2022 21:01:49 GMT

MarilynG1

Thank you for the response and answering my question.

Re: Reporting Canadian RRSP Withdrawl on US Taxes

bntax_2023 — Wed, 01 Mar 2023 21:17:21 GMT

I have been filing credit for foreign tax credit. From this answer can I change my method and just claim the net after tax distribution as taxable this year ?

Also on the same subject I input my wife Canadian RRSP withdraw in 1099R and it would not transfer to 1040 line 5a for tax year 2022

Re: Reporting Canadian RRSP Withdrawl on US Taxes

HopeS — Wed, 01 Mar 2023 23:04:49 GMT

For foreign taxes paid, you can choose to take the amount of any qualified foreign taxes paid during the year as a credit or as a deduction. To choose the deduction, you must itemize deductions on Schedule A (Form 1040). You must choose either the foreign tax credit or itemized deduction for all foreign taxes paid or accrued during the year. This is an annual choice.

Please follow these steps to enter the RRSP.

To enter Canadian RRSP information, go to:

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

While going through the interview you will see the screenshot below, revisit your entry to see if you had entered anything in the taxable distribution section.

Also, see the link below:

Canadian RRSP

@bntax_2023

Re: Reporting Canadian RRSP Withdrawl on US Taxes

bntax_2023 — Thu, 02 Mar 2023 12:34:34 GMT

Thank You HopeS, this is different from the response of MarilynG1 on Feb 4. She suggested that just report the taxable portion of Canadian RRSP distribution as the net received (after Canadian 25% tax) on 1040 line 5b. In other words, just deduct the Canadian tax right off . Please clarify

In the second part of your response, do I have to put anything on the box "Taxable part of Distribution"

Thank You very much

Re: Reporting Canadian RRSP Withdrawl on US Taxes

MarilynG1 — Thu, 02 Mar 2023 17:26:55 GMT

Yes, you will enter an amount in both boxes. Enter Gross Distribution, then Taxable Portion (Gross minus Tax paid).

Then, claim the Foreign Tax Credit for the amount of Canadian Tax you paid. Here's the steps:

At the right upper corner, in the search box, type in "foreign tax credit" and Enter
Select Jump to foreign tax credit
Follow prompts
On screen, "Tell Us About Your Foreign Taxes", do not check the first box.
(First box says -you have no more foreign taxes to enter other than the 1099-DIV, 1099-INT, 1099-OID or a Schedule K-1)".
Follow prompts
Choose the Income Type, select "Passive Income"
On screen, "Country Summary", add Canada
On screen, "Other Gross Income", enter Canada RRSP and the Gross Distribution amount
On screen, "Foreign Taxes Paid", under foreign taxes on Other Income, enter the amount of Canadian tax you paid

@bntax_2023

Re: Reporting Canadian RRSP Withdrawl on US Taxes

bntax_2023 — Thu, 02 Mar 2023 20:02:53 GMT

After the input of RRSP gross distribution and taxable distribution as the net (after deducting 25% Canadian tax) Can I still file form 1116 to get the foreign tax credit I paid to Canada ?

Thank You Marilyn

Re: Reporting Canadian RRSP Withdrawl on US Taxes

DianeW777 — Thu, 02 Mar 2023 20:34:11 GMT

The taxable amount of your distribution should not be reduced by the tax payment to Canada. The full taxable amount is required to be included in your US income. Once you have completed that, then you do take the foreign tax credit using the instructions provided by @MarilynG1. They are provided here again for your convenience

Foreign Tax Credit for the amount of Canadian Tax you paid. Here's the steps:

Search (upper right), type in "foreign tax credit" and Enter
Select Jump to foreign tax credit
Follow prompts
On screen, "Tell Us About Your Foreign Taxes", do not check the first box.
(First box says -you have no more foreign taxes to enter other than the 1099-DIV, 1099-INT, 1099-OID or a Schedule K-1)".
Follow prompts
Choose the Income Type, select "Passive Income"
On screen, "Country Summary", add Canada
On screen, "Other Gross Income", enter Canada RRSP and the Gross Distribution amount
On screen, "Foreign Taxes Paid", under foreign taxes on Other Income, enter the amount of Canadian tax you paid

@bntax_2023

Re: Reporting Canadian RRSP Withdrawl on US Taxes

NM1 — Thu, 09 Mar 2023 23:25:36 GMT

What @DianeW777 said.

If you follow the original suggestion of subtracting the Canadian tax paid to come up with the "taxable amount", you are leaving taxable income out and circumventing the proper calculation of proportional taxation. If you then also complete a Form 1116 to get a Foreign Tax Credit, you are effectively doing both a deduction and a credit. I suspect the IRS would frown on that.

Thanks to the tax treaty between the U.S. and Canada, a Canadian RRSP distribution is treated pretty much exactly like a distribution from a tax-deferred U.S. IRA would be - i.e. all of it counts toward taxable income (barring uncommon steps such as QCDs, which may or may not be permitted with foreign retirement income anyway). Moreover, when a foreign tax credit is claimed, that credit may only be applied against the tax that would have been due to the IRS on the amount of that particular foreign portion of your total income. Since Canada does a flat 25% withholding on RRSP distributions to non-residents, in most cases this will be higher than the applicable U.S. marginal tax rate, meaning that the credit from the IRS would be less than the amount withheld by Canada. So you can't simply take the total Canadian tax paid off the top when reporting it to the IRS. Note that the unused amount of the foreign tax paid will be available as a credit carryover, but you'll probably encounter the same situation next time, too.

Re: Reporting Canadian RRSP Withdrawl on US Taxes

gschmutz — Tue, 14 Mar 2023 18:33:57 GMT

I am trying to follow the instructions for claiming a foreign tax credit from an RRSP withdrawal. However, when I jump to foreign tax credit, I do not get to a screen that says, "Tell us about your Foreign Taxes,' I get screens that are titled Foreign Tax Credit => Foreign Taxes => Do you want the deduction or credit = > Reporting Foreign Taxes Paid => Where did you receive Dividend Income from?

So, Tubotax wants to associate foreign taxes with a Form 1099-Div which I do not have from Canada. I don't receive an option to input the taxes I paid on the RRSP distribution.

I have looked through mu 1099-Div inputs and do not see anything there that reports foreign income.

Any help is appreciated

Re: Reporting Canadian RRSP Withdrawl on US Taxes

DianeW777 — Tue, 14 Mar 2023 19:35:03 GMT

Once the income is reported on your United States (US) return follow the instructions below to take the foreign tax credit.

Foreign Tax Credit for the amount of Canadian Tax you paid. Here's the steps:

Search (upper right), type in 'foreign tax credit' and Enter > Select Jump to foreign tax credit
Follow prompts > On screen, 'Tell Us About Your Foreign Taxes', do not check the first box.
1. First box says -you have no more foreign taxes to enter other than the 1099-DIV, 1099-INT, 1099-OID or a Schedule K-1'.
Follow the screen prompts
Choose the Income Type, select 'Passive Income'
Select Canada on the 'Country Summary screen
For the 'Other Gross Income, enter Canada RRSP and the Gross Distribution amount
For the 'Foreign Taxes Paid, under foreign taxes on Other Income, enter the amount of Canadian tax you paid

This will reflect the foreign tax credit on your tax return.

@gschmutz

Re: Reporting Canadian RRSP Withdrawl on US Taxes

gschmutz — Tue, 14 Mar 2023 20:36:31 GMT

thank you for your response.

I do not get a screen that says "Tell us about your Foreign Taxes", I do not get a first box to check.

first screen: Title: Foreign Tax Credit.

Body:

Since you earned money in another country, this credit could reduce your taxes here in the states.

You told us you paid foreign taxes on a 1099-DIV, 1099-INT, 1099-OID, or K-1. Now we'll see if you qualify for the foreign tax credit.

next screen: Title: Foreign Taxes

Body:

You need to complete Form 1116 if you want to claim the foreign tax credit.

A separate Form 1116 must be used for each category of foreign income for which you paid taxes.

Must you take the foreign tax credit? Not necessarily. We'll give you another option next.

next screen: Title: Do you want the deduction or Credit?

Body:

You can claim your foreign taxes as an itemized deduction, or you can take a credit for foreign taxes paid. We can help you decide which option is better for your situation.

choose Take a Credit

next Screen: Title: Reporting Foreign Taxes Paid

Body:

We'll begin with foreign taxes paid on income reported on Form 1099-INT (interest), 1099-DIV (dividends), 1099-OID (original issue discount), or Schedule K-1 (partnerships, S corporations, estates and trusts). If you paid foreign taxes on multiple sources of foreign income, please see these special instructions.

Next Screen: Title : Where did you receive Dividend Income From?

Body:

Select all countries to which you paid foreign tax on dividends reported on Form 1099-DIV. Learn More

	Note:	Select RIC for any income received from a mutual fund or other Regulated Investment Company.

Country

This is nt the sequence that you describe. If I enter Canada here, it wants to associate the country with 1099-Div, Int, OID or K-1 - It does not give me an opportunity to enter the foreign taxes paid.

Thank you for the help.

Re: Reporting Canadian RRSP Withdrawl on US Taxes

MarilynG1 — Tue, 14 Mar 2023 21:03:14 GMT

That is correct, this part of the interview is asking about Foreign Tax you already reported on a 1099-Div, etc.

Continue through the interview until you come to a screen asking if you have other Foreign Income to report and choose General Category Income.

Then choose 'Add a Country' (you may have RIC already showing) and add Canada.

The enter description and gross amount of your Canadian Pension.

Continue until you come to a screen where you can enter the amount of Canadian Tax you paid.

@gschmutz

Re: Reporting Canadian RRSP Withdrawl on US Taxes

bntax_2023 — Wed, 15 Mar 2023 13:22:14 GMT

Previous instruction shows that this should be reported on "Passive Income" Category.

Please clarify

Re: Reporting Canadian RRSP Withdrawl on US Taxes

AmyC — Thu, 16 Mar 2023 15:41:35 GMT

Passive income is earnings from dividends, interest, royalties, rents, annuities, etc., in which the taxpayer is not actively involved.

A pension is not passive income. See Topic No. 425 Passive Activities – Losses and Credits - IRS.

Let me provide all the steps necessary to enter a foreign pension and credit for tax paid.

To enter your foreign pension in TurboTax online program, you will need to create a substitute form 1099-R.

Login to your TurboTax Account
Click on the Search box on the top and type “1099-R”
Click on “Jump to 1099-R”
Answer "Yes" to "Did you receive any 1099R forms?"
Scroll down and select "I'll type it in myself"
Select "I need to prepare a substitute 1099-R" and follow the prompts

As to the Federal ID, if your foreign issuer does not have the ID number, try entering ones.

Since you also paid Foreign Tax on that income, please see the following steps from @TurboTaxKarenJ:

To report the foreign tax paid on your pension for foreign tax credit:

Enter foreign tax credit in the search box at the top of the page and click the Jump to link
Click 'Yes" you paid foreign taxes
Click through the screens regarding foreign interest and dividends
Click yes that you have reported all your foreign income already in TurboTax
Click that you want to take a credit
Answer question about the Simplified Limitation Election
Choose income type for pension - it will be General category income
Add the name of your county
Enter description -XXX pension
Enter Pension Income amount that you previously reported in another section of TurboTax (1099-R substitute)
Enter your taxes you paid on your foreign pension in the box "Other income"
Continue through the foreign tax credit screens until done.

Re: Reporting Canadian RRSP Withdrawl on US Taxes

NM1 — Fri, 17 Mar 2023 02:15:34 GMT

I am genuinely grateful to see such strong participation from Intuit employees to help clients with a complex subject. Thank you for that. Unfortunately the experts here, along with others on similar TT Community Q&A threads, differ in ways that affect how the reporting should be done: gross income vs net of taxes; passive vs general income on the 1116; 1099-R substitute or not; etc. Would it be possible to reach a consensus so there isn't a wide variety of methods in what the IRS receives, as well as reducing client exposure to errors the IRS would catch?

Note that the TurboTax "interview" process has a line for Canadian plans under the Retirement section of Wages & Income. Therefore, I reported my RRSP income this way (gross amount because it is all taxable, converted to USD using the exchange rate that was applied to the net amount I actually received). Then I let TT handle it. The income appeared on line 5a of the 1040, as expected; if it hadn't, TT - and perhaps the IRS - would get hung up on the lack of a valid TIN, which few foreign payors have. ("Try entering ones" seems a bit dodgy since it isn't true, which makes the final 1040 signature declaration perjurious.) After that, I followed the instructions for doing the 1116. For whatever it's worth, most cross-border accountants who have posted on the subject say to categorize it as Passive Income, but a few do say General Income instead.

Re IRS Topic 425, linked above: it seems to pertain to rental and real estate activities, so I'm not clear on its applicability here. I would like to note, though, that many RRSP/RRIF holders living in the U.S. cannot make any modifications to their investments due to SEC broker-licensing restrictions. Some waivers have been granted but they don't cover everyone. For those of us affected this way, the only "active and material participation" consists of initiating a withdrawal - and even that isn't an active choice with a RRIF.

Re: Reporting Canadian RRSP Withdrawl on US Taxes

Cutesy — Thu, 04 Jan 2024 20:20:06 GMT

I am so confused.

Re: Reporting Canadian RRSP Withdrawl on US Taxes

AmyC — Mon, 08 Jan 2024 23:50:59 GMT

@Cutesy Can you please clarify your situation or help needed?

Re: Reporting Canadian RRSP Withdrawl on US Taxes

Cutesy — Tue, 09 Jan 2024 00:05:55 GMT

Reading through this thread is confusing to me. The last person's message about being consistent on the solution went unanswered. Perhaps I should just go with the "best answer" vote?

My situation is the same. 2023 is the first year I withdrew from my RRSP.