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IRS requires two separate forms 1116 for general income and for passive income. They explain these categories but no mention of IRA, 401(k). TurboTax does not distribute automatically on Form 1116 the income between the general income and passive income, so I wonder under which category should the IRA Withdrawal go?
Thank you!
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you do not get a Foreign Tax Credit or even a deduction for foreign taxes paid by the IRA. the tax was not imposed directly on you but on the IRA.
I am a US Citizen living in Canada, and I will have to pay Canadian taxes on my withdrawal from my US IRA account. So I expect my US tax return to show somewhere that I paid taxes in Canada for the withdrawal, and the 1116 form looks like the logical place to do so.
here is the answer Chat GPT gave me, quite helpful, hope it is right:
For IRA and 401(k) withdrawals, the classification on Form 1116 depends on the source and nature of the income. Here's how the IRS typically handles these accounts:
If you're still unsure, consulting a tax professional can help ensure proper classification for your situation, particularly if you are dealing with foreign tax credit claims.
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