How to handle NR4 code 43

Forum|Forum|3 months ago
March 4, 2026
1 reply
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Hi All,

My wife received and NR4 code 43 (registered retirement savings plan lump sum payment) from a Canadian bank. She was the beneficiary of her brother, who passed away and left her his RRSP through his estate.

The bank holding his RRSP cut a check last year and mailed it to my wife. The estate paid the Canadian taxes due on that. So my wife received the entire balance. It was over 100k US, so we will need to file a Form 3520. No issue there.

I was surprised to get this NR4 from the Canadian bank handling this. The amount of income is not very large (~5k box 16), but somehow the entire taxes were not due to the estate when the bank liquidated the RRSP. The NR4 indicates that 25% taxes were withheld (box 17). My wife never received any further check from the bank, so it must have been included in the total when the account was liquidated.

I'm not sure how to handle this income in turbotax. Trying to work through the Canadian Registered Pension Income section doesn't work at all. She can't actually inherit an RRSP from her brother, so she never had ownership or control over the account; it was liquidated directly into check form for her. I can enter as misc income, but there is no way to indicate that foreign taxes were withheld, so that I can get a credit for those.

I could "make up" a 1099-INT/DIV so that I report the income and get foreign tax credit, but that seems weird. I'm not sure why we even have to report this. Inheritance is not taxable (only gotta file the 3520) and this "income" was just part of the inheritance, and the Canadian government already withheld the 25% tax.

Any ideas on what I should do?

Thank you!

DaveF1006

Level 15

Yes, this can get complicated since it involves both inheritance law and cross-border retirement rules. You’re correct, inheritances usually aren’t taxed as income in the U.S. But an RRSP, much like a U.S. IRA, holds income that hasn’t been taxed yet. As a result, this is fully taxable to your wife. Here is how to report.

Do not use the "Canadian Registered Pension" section; as you noted, she isn't the owner of a pension. Instead, report it as Miscellaneous Income to keep the entry clean and avoid "1099-R" e-file rejections:

Go to Federal > Wages & Income.
Scroll to the bottom and select Miscellaneous Income, 1099-A, 1099-C.
Select Other reportable income.
Description: Enter "Distribution from an inherited RRSP ".
Then list the amount from the check.

Even though you entered the income as "Miscellaneous," you can still link the 25% withholding (Box 17) to it and receive a foreign tax credit.

Go to Federal > Deductions & Credits.
Select Foreign Tax Credit (under Estimates and Other Taxes Paid).
When the interview asks if you have "other types" of foreign income (after it checks for 1099-INT/DIV), say YES
Choose Passive Income as the category.
Country: Canada.
When you get to a section that says Gross Income, type "Inherited RRSP Income." for a description
Income Amount: Enter the same USD amount you reported in the Miscellaneous section.
Foreign Tax Paid: Enter the amount of foreign tax from the distribution. This will be in a section where you enter the foreign taxes paid
Date Paid: Use the date on the check or 12/31/2025.
Finish out the interview by selecting continue until the end.

[ Edited 03/5/2026 I 7:51am PST]

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vosskoAuthor

Level 3

Dear Dave,

Thank you so much for your reply.

My research indicated that is should be reported under Misc Income, so I did that. However, I was unable to ever trigger the "do you have other types of foreign income".

The TT help also indicates that I need to enter foreign income credits in order of largest to smallest. Is that still true. So if the taxes paid on this inheritance are larger than the foreign taxes attached to my other 1099s, how would I do this. I've only been successful if I enter the NR4 info as a 1099-int and indicate that foreign taxes were paid. Then I can work on the form 1116 in whatever order I want.

That said, the rules are pretty clear on what to do (estate paid taxes on bulk of RRSP at date of death), I am responsible for taxes on the gains until the check is cut (on the NR4). I need to file a F3520 (over 100k transferred, mfj), FBAR (over 10k at any time in year), but do NOT need to file form 8938 (account closed by year end, and never exceeded 150k during the year).

I'll give it a try again, and report back.

Thanks

DaveF1006

Level 15

To clarify, were the amounts on the NR4 paid with the distribution check and the only purpose of this form was to inform you that the taxes were paid at the time of the distribution? This part isn't clear to me.

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