Report US tax refund from Canada?

[DEB317]

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?

[Anonymous_]

@pk?

[pk · Accepted solution]

@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]

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

[pk]

@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

[DEB317]

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.

[pk]

@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

[DEB317]

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