In 2022 I sold a condo in Canada and paid Canadian capital gains tax. This year received a tax refund from Revenue Canada. Do I have to report this to the IRS on my 2023 1040?
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@DEB317 , assuming you were US person ( citizen / GreenCard/ Resident for tax purposes) during the tax year 2022 , that you recognized this sale of this capital asset ( i.e. you included this in your world income ) for US tax purposes and that to ameliorate the double taxation ( by Canada and the US) effects, you chose either foreign tax credit or tax deduction --- YES you would need to amend your 2022 Federal return and perhaps State ( depends on the state laws -- what state ) to reconcile the change in Canadian tax for the asset disposed.
You do not report this on your 2023 return ( due in 2024 April ).
Does this make sense ? Is there more I can do for you ?
pk
@DEB317 , assuming you were US person ( citizen / GreenCard/ Resident for tax purposes) during the tax year 2022 , that you recognized this sale of this capital asset ( i.e. you included this in your world income ) for US tax purposes and that to ameliorate the double taxation ( by Canada and the US) effects, you chose either foreign tax credit or tax deduction --- YES you would need to amend your 2022 Federal return and perhaps State ( depends on the state laws -- what state ) to reconcile the change in Canadian tax for the asset disposed.
You do not report this on your 2023 return ( due in 2024 April ).
Does this make sense ? Is there more I can do for you ?
pk
However, the Canadian refund was not received until this year. So, presumably, this must be reported on my 2023 1040.:Also, in amending my 2022 return for the sale, how exactly do claim the foreign tax credit on my TurboTax form? Thanks
@DEB317 , even if you received the refund from Canada in 2023, it for tax year 2022. So , if you have claimed an original amount on US taxes ( or did not but now want to do so ) you file an amended return for US tax year 2022.
To amend a filed and accepted return 2022 return ( I am assuming here that you have on your computer 2022 Cd or downloaded version the Tax software ), select "AMEND a RETURN". From here on TurboTax will walk you through the process -- essentially you prepare a changed return using the original as basis ( just as you used your 2021 return as the basis for the 2022 except it is much more involved). and get both an amended 2022 ( 1040 with all the schedules ) and a 1040-X ( a summary of the changes ).
Does this help or do you need more details ?
pk
When I attempt to amend my 1040 for the foreign tax credit it tells me to file form 1116 but does not provide instructions or Easy Steps. I’ve really hit a brick wall on this. Grateful for any help.
@DEB317 since I shuttle between step-by step and forms mode all the time, give me day to create your scenario and see exact screens that you should see -- tomorrow.
Tell me first
(a) is your tax home for 2022 in Canada or in the USA ?
(b) you a US person ?
(c) did you claim the sale of the condo on US taxes original tax filing for tax year 2022 ? When did you file your return?
(d) Did you claim foreign tax credit or deduction for the taxes paid to Canada ?
(e) Amount of foreign tax refund from Canada and (if ) what was claimed in the original US tax return?
(f) was the sale of the condo your ONLY foreign source income ?
(f) Your US income for the year 2022 and your Foreign source income for 2022
I look forward to hearing from you so I can create reasonable accurate scenario.
Please NO Personally Identifiable Information -- if you want you can provide these bits of info in PM and I will still answer either directly or in here -- thisa is visible to all and sundry
pk
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