Canada Mortgage Hub Discussion Board

Canada Mortgage Hub Discussion Board



SearchSearch   Members      Login
Today: 17.01.2018 - 21:36:17
   Canada Mortgage Hub Discussion Board -> Mortgage Winnipeg -> What IRS form can be filed to reclaim 10% witholding of Candian Mortgage interest paid to Canadian bank?
Autor Post

p_rajesh

User




Statistic:
Total topics: 2
Total posts: 86
Reputation: 909 ±
Penalties: 0
What IRS form can be filed to reclaim 10% witholding of Candian Mortgage interest paid to Canadian bank?
--------------------------------------------------
--------------------------------------------------
Can mortgage
Post # 1.

pate13

User




Statistic:
Total topics: 13
Total posts: 41
Reputation: 299 ±
Penalties: 0
Use Form 1116 to claim the Canadian tax as a credit against your US tax. See attached IRS link: _http://www.irs.gov/taxtopics/tc856.html
--------------------------------------------------
Post # 2.

orlad

User




Statistic:
Total topics: 13
Total posts: 17
Reputation: 494 ±
Penalties: 0
Yawn23, I don't believe that you have any tax that you can reclaim. Tax withholding that can be reclaimed is tax withheld on income payments to YOU, not on income payments that you make to others. The 10% withholding on interest payments that you make to a Canadian bank on a Canadian mortgage is not a tax on you and not something that you can recover. It is a tax on the Canadian bank. You have a 100% interest deduction which you report on Schedule E of Form 1040 and the bank has 100% interest income of which 10% goes to the government. It is not clear from your question if the 10% withholding tax is going to the U.S. government or the Canadian goverment, but read on.I am not sure why 10% is withheld from the interest paid to a Canadian bank. If you are a U.S. citizen or resident paying a Canadian lender, generally under Article XI of the U.S.-Canada treay, you must withhold 10% from the amount you pay the bank and remit this to the IRS. Maybe the bank is doing this for you. However, under the U.S.-Canadian tax treaty, Canadian rental real estate results in you having a Canadian Permanent Establishment, also known as a PE (Article V of the treaty) and interest paid related to a Canadian PE is NOT subject to the 10% withholding (paragraph 5 of Article XI). Also, having a Canadian PE means that you need to file Canadian income taxes (see the link below which says:Is this tax and benefit package for you? Use this package if any of the following applies to you:You were a deemed resident of Canada on December 31, 2005. For exceptions, see the following section “What tax and benefit package should you use if this one is not for you?” You were a non-resident of Canada throughout 2005 and you are filing a return to elect under section 217 or section 216.1 you were a non-resident of Canada throughout 2005 and you are reporting Canadian-source income other than from employment in Canada, from a business with a permanent establishment in Canada, from rental income from real property located in Canada,...
--------------------------------------------------
Broker mortgage
Post # 3.
1  


Powered by © 1.8 eXclusive