Streamlining Your Tax Filing Process: How an AI Legalese Decoder Can Simplify Completing a 1040NR for 401(k) Withdrawal
- May 28, 2024
- Posted by: legaleseblogger
- Category: Related News
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# Canadian Residents Seeking Advice on Withholding Taxes on US 401(k) Withdrawals
Hi all.
I’m sure there must be other Canadians in a similar situation to us. We’re Canadians, resident in Canada, with no current US connections, no green cards, no US citizenship. We’re about to start taking withdrawals from US 401(k) accounts. We’ve heard (from a number of sources) that the US custodians (Vanguard, Fidelity) may withhold 30% tax on the payments, even though they’re supposed to withhold only 15% according to the Canada/US tax treaty. If they do that, we’ll need to file a 1040NR to get back the excess withheld tax.
We’re looking for advice on completing the 1040NR; specifically, which fields need to be completed with the total 401(k) withdrawal and the tax withheld. We don’t have any other US income of any kind to declare.
Has anyone successfully filed a 1040NR and claimed back excess withholding tax, and would be willing to share how they filled out the 1040NR form?
Thanks.
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>We’ve heard (from a number of sources) that the US custodians (Vanguard, Fidelity) may withhold 30% tax on the payments, even though they’re supposed to withhold only 15% according to the Canada/US tax treaty. If they do that, we’ll need to file a 1040NR to get back the excess withheld tax.
Yes, that’s why you file a W-8BEN with them (Fidelity) to indicate the Article and section of the tax treaty for the ax treaty amount and then you don’t have to file a non-resident US tax return. You just report the 401k income to Canada.
Article XVIII Section 2: [https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties/country/united-states-america-convention-consolidated-1980-1983-1984-1995-1997-2007.html](https://www.canada.ca/en/department-finance/programs/tax-policy/tax-treaties/country/united-states-america-convention-consolidated-1980-1983-1984-1995-1997-2007.html)