How to report dividends off Canadian NR4 for US tax filing?

[PatriciaR · Accepted solution]

Here are the steps to enter your Canadian NR4 Statement:

• While signed into your TurboTax account, Select Federal Taxes (top of program)
• Select the Wages & Income sub-tab (under Federal Taxes, top left of program)
• Select Retirement Plans and Social Security (may have to click "Skip to all income" to see all income choices)
• Select Start or Revisit next to Social Security (SSA-1099, RRB-1099)

The TurboTax interview will guide you through entering your NR4.

To enter any foreign tax you already paid to Canada, follow these steps:

• Select the Deductions & Credits sub-tab (under Federal Taxes, top of program)
• Select Foreign Taxes under Estimates and Other Taxes Paid (may have to click "skip to all tax breaks" to see all deduction choices)

Enter the amounts on your NR4 converted to U.S. dollars as of the transaction date. Please click this link for historical conversion rates:   https://www.fiscal.treasury.gov/fsreports/rpt/treasRptRateExch/treasRptRateExch_home.htm

Click on screenshots below for more detail

For more info specific to the US/Canadian tax treaty, please see http://www.irs.gov/pub/irs-pdf/p597.pdf

[minchu2481]

For the income type 40 reported on NR4, what is the Income Category to use for reporting Foreign Tax credit? When I use Lump-Sum distributions Category then Turbo Tax indicates that "You indicated that this foreign tax credit computation worksheet is for lump-sum distributions, but you did not enter a lump-sum distribution in the pension distribution topic". Then, it goes on to show me how to enter Pension benefits. This is different from your recommendation here to use Social Security (SSA-1099, RRB-1099) pension benefits income category?

[grasztalos]

Gross Income noted on NR4 is in Canadian dollars.  What do I report for the US dollar amount since the conversion rate constantly changes?

[TatRay]

Found an organization that listed historical exchange rates.  It only goes back 180 days so you can't get the whole year.  Decided to use the most recent historical average of .77.  Hope that helps. 

[ReneeM7122]

You are correct.  Because The Internal Revenue Service has no official exchange rate and. Generally, it accepts any posted exchange rate that is used consistently, it is ok to use the most recent historical average.

Here's a link to the IRS that supports the above.

@TatRay

[pmissabe]

These are NOT the steps for entering NR4 Code 9 OTHER DIVIDENDS.  Your steps are for Code 39 RETIREMENT. 

There is absolutely no HELP in how to include NR4 in TurboTax when it is Code 9 OTHER DIVIDEND.  The only help I could find was for NR4 Code 39 Retirement.  There are thousands of Canadian National Railway employees working in the United States that receive the NR4 for Code 9 Other Dividend.  It would behoove TurboTax to document those steps.  I had several phone conversations using CONTACT US.  I did not record the name of the person I spoke to when I was filing my return when I asked specifically how to enter NR4, Code 9. That conversation was on March 24, 2021 and the TurboTax person stated that the Canadian NR4 was a duplicate of the US Form 1099-DIV and I did not have to enter that information.  So, I didn't and submitted the tax return.  However, it didn't sit right with me as I had entered the NR4 in previous years (had misplaced my documentation so couldn't remember how to enter it which is why I was calling for help again) and I knew I did have to enter the NR4 information.  Selected the CONTACT US again on March 29, 2021.  I received the TurboTax callback at 3:05pm from "Diamond" explaining that I have been seeking help on how to include NR4 form in TurboTax that address' Code 9 OTHER DIVIDEND.  Explained how I was previously advised by TurboTax that the NR4 was a duplicate of the same information in the Form 1099-DIV but I felt that was incorrect.  What I was asking is that the lines in NR4 do not match up to the lines in 1099-DIV and I needed to know how to convert that information into the 1099-DIV worksheet.  She understood what I was asking, put me on hold, and after a short period came back to me stating Line 1, Box 16 is a conversion to 1099-DIV Box 1b, and Line 1, Box 17 is a conversion to 1099-DIV Box 7.  Finally had someone that knew the correct answer and could help me.  She was wonderful.  TURBOTAX NEEDS TO DOCUMENT THESE STEPS IN THE ONLINE SUPPORT.  I now have to amend the 2020 tax return to include my NR4 because your customer support on March 24 advised that I didn't need to enter it. 

[ReneeM7122]

You can use these steps below to enter the NR4 code 09. 

NOTE: Make sure you convert the Canadian currency to USD before you enter it into TurboTax. 

• Log into your account and click Take me to my return
• Click Federal to the left and Wages & Income at the top
• Scroll down to Interest and Dividends section and click Show More
• Click Start/Revisit next to Dividends on 1099-DIV
• Answer Yes on screen asking Did you receive any dividend income? 
• Choose I’ll type it in myself on next screen
• Then on Let’s get the details from your 1099-DIV screen, enter the information there. Box numbers may be a different but titles should be similar so you know where to enter what data
  • If you have more boxes than you see listed, click to put a check in the box next to the statement My form has info in more than just these boxes (this is uncommon). and that will expand more fields to input data into. 

Once you have entered that, follow these steps next:

• lick Federal to the left and Deductions & Credits at the top
• Scroll down to the Estimates and Other Taxes Paid section and click Show More
• Then click Start/Revisit next to Foreign Taxes there and go through and answer those questions about foreign taxes paid to Canada on your NR4. 

@pmissabe

[47acre94]

Hello ReneeM7122,

I saw your response to @pmissabe  and I believe you both. I have a similar NR4 statement, only the income code is different. Instead of being code 9, which clearly shows the type of income as "Dividends" on the back of the NR4, I have code 11, which is stated as "Estate and trust income". When I called the generator of the statement, they told me, however, that this was in fact dividend income.  In previous years, I recall receiving an explanatory email from this Canadian institution that clearly explained what the income was. Unfortunately this year I only received the NR4 with the income code number "11", which left me scratching my head!  Unless you know something different, I plan to complete my return following the same instruction provided for dividends. 

[AmyC]

Two thought streams:

• enter it as a dividend. Then get something in writing saying that is what it is from the issuer and add it to your tax pile.
• enter it as other income and the plain description of NR4 income.

  • You can enter it as other income. Follow these steps:

  • Log into your return
  • Federal
  • Click on Income
  • Scroll to the bottom section, Less Common Income
  • Select Miscellaneous income, 1099-A, 1099-C, start
  • Select Other Income
  • Did you receive other wages? Yes
  • Continue
  • Household employee? Continue
  • Sick or disability pay? Continue
  • Any other earned income or wages? Yes
  • Enter source of Other Earned Income
  • Select Other
  • Continue
  • Enter description NR4 Income
  • Enter amount

@47acre94

[taxquestions2021]

Thank you for your NR4 Dividend help.  Under the category Income/Dividends:   When you say to enter the NR4 info from box 16 (NR4)in Box 1b and line 1 of Turbo Tax , are you referencing box 1a as line 1 or do I just enter the dividend in box 1b and the tax withheld by the Canadian govt found in box 17 (NR4) in box 7 of Turbo Tax.

Thank you in advance for the clarification.

[DaveF1006]

It depends if it is a qualified or an ordinary dividend. Please read this Turbo Tax article written by GeoffreyG for more detail. The reason why this is important is that Qualified Dividends are taxed at the more favorable capital gains rate than ordinary dividends.

So the answer to the question is, if your dividend paid qualifies as a qualified dividend, report this in Box 1B. If an ordinary dividend, Box 1A. The foreign tax paid will be reported in Box 7 of the 1099-DIV.

[taxquestions2021]

It doesn't work.  I entered it into 1B without anything in 1A and TT just keeping sending an error and won't let me complete the return.  The only way I could get it to work (after talking to both USA Turbo Tax and Canadian Turbo Tax) was to enter it in both 1A and 1B so something isn't working right!!

[JohnB5677]

You are correct.  Box 1a is total ordinary dividends, and box 1b identifies that portion of box 1 that are qualified dividends.

Box 1a. Total Ordinary Dividends  Instructions for Form 1099-DIV (01/2022)

Enter dividends, including dividends from money market funds, net short-term capital gains from mutual funds, and other distributions on the stock. Include reinvested dividends and section 404(k) dividends paid directly from the corporation. Box 1a includes amounts entered in boxes 1b and 2e and it also includes the amount of the recipient's share of investment expenses that you report in box 6.

[22M22]

Thank you for writing this out! I can’t agree with you more…why aren’t these steps clearly written out and explained by TurboTax?! I have one question…did you have to write the gross income in for both box 1a and 1b? I wasn’t able to process further without having something written in both?! Thank you!