Foreign Taxes
The Canadian government recently had a significant amount of money withheld from a distribution associated with the purchase of Fording Coal Trust by another firm. My IRA received cash and a small amount of stock in the other firm. The information I received indicated the withholding was for income taxes. Can I file a Canadian tax return to get at least a portion of the money back from the Canadian government? Will a refund be sent to my IRA or directly to me? Thanks
Permalink Submitted by Marvin Rotenberg on Wed, 2008-12-31 19:58
Yes.
An income tax treatybetween the U S and a foreign country often reduces the withholding rate ( sometimes to zero) for certain types of income paid to US residents.
Please refer to Tax Treaty Tables in IRS Pub. 515 Witholding of Tax on Nonresident Aliens and Foreign Entities.
Many US Treaty partners require the IRS to certify that the person claiming treaty benefits is a resident of the US. IRS Form 8802 Application for US Residency Certificate ( line 4c IRA).is used for this purpose. Upon submission the IRS will issue form 6166, a letter of US residency certificate. Upon receiving form 6166 from the IRS you would have to send it to the foreign withholding agent.
Please check the publicatios and the IRS instruction forms mentioned above. All of whick can be found on the IRS web site. Also check out IRS Publication 4152 (electronic Tool KIt).
Marvin
Permalink Submitted by Brinton Ramoly on Thu, 2009-01-01 17:11
[quote=”[email protected]“]The Canadian government recently had a significant amount of money withheld from a distribution associated with the purchase of Fording Coal Trust by another firm. My IRA received cash and a small amount of stock in the other firm. The information I received indicated the withholding was for income taxes. Can I file a Canadian tax return to get at least a portion of the money back from the Canadian government? Will a refund be sent to my IRA or directly to me? Thanks[/quote]
Thanks Marvin