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Returning Member
posted Mar 17, 2025 11:04:57 AM

I am now a US citizen and retired here. I worked in Canada and have an RRSP there which I withdrew funds from last year. Canada withheld 25% taxes. How do I report this?

TurboTax only allows me to enter the net amount withdrawn and amount taxable. Given that I've already paid 25% to Canada, how do I calculate the amount taxable by the US? Or do I declare the gross amount in USD, and then under form 8960 Part II b) then declare the amount of foreign tax paid in USD, and if so, how to I tie the two figures together?

0 3 1565
3 Replies
Expert Alumni
Mar 17, 2025 11:14:22 AM

You report the pension plan distribution and then work through the Foreign Taxes section to see if you qualify for a foreign tax deduction or credit. You do this is the Estimates and Other Taxes paid section in the Deductions and Credits area of TurboTax, then choose Foreign Taxes to assign your foreign income to a country and enter the tax paid. To the extent you have US taxes on your foreign income, you will get a credit for those taxes on your US tax return. You can take a deduction or credit for your foreign taxes paid or accrued on income, the credit is normally better.

Returning Member
Mar 17, 2025 1:44:10 PM

Thanks, but just so I'm super clear on this, the RRSP withdrawal should be reported under "Personal Income: Canadian Retirement Summary" (or a "mock" 1099-R? or ....?) with 100% being taxable, then, use the Foreign Taxes paid to report the 25% tax withholding by Canada? 

Expert Alumni
Mar 26, 2025 3:54:04 PM

No.  Report this as a Canadian Registered Pension listed under Retirement plans and Social Security. Then claim a foreign tax credit on the taxes you paid in Canada.

 

  1.  Go to Federal
  2. Deductions and credits 
  3. Estimate and other taxes paid 
  4. Foreign Tax Credit>start or revisit
  5.  As you go through the screens, when it asks "Tell Us About Your Foreign Taxes" select none of these apply.
  6. When it asks if you wish to take the deduction and credit, take the credit.
  7. Continue through until you reach a screen that says "No other income or expenses" Say no
  8. Continue through until it asks the income type, say Passive Income
  9. Next add a country pick Canada
  10. Other Gross Income say  Canadian Registered Pension RRSP
  11. Continue through the interview until it asks for the foreign taxes you paid, here record the amount.  
  12. Now you are done reporting the foreign taxes. Just keep going through the section without making any more entries. You will have finished reporting your gross income from the sale and the foreign taxes paid.