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!
