Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: 8bits who wrote (29208)	12/11/2007 11:40:14 AM
From: Paul Senior	Respond to of 78973

I have some suspicions too about that Canadian withholding tax taken out of distributions (dividends) of Canadian stocks held in an ira. I almost understand this part: "You cannot claim a credit or deduction for foreign income taxes paid on income you exclude. If all of your foreign earned income is excluded, you cannot claim a credit or deduction for the foreign taxes paid on that income. If only part of your income is excluded, you cannot claim a credit or deduction for the foreign taxes allocable to the excluded income." I interpret that as, you'll see in your monthly broker's statement that in your ira for every dollar of Canadian trust dividends you got that month, 15 cents has been funneled off to the Canadian tax authorities. That 15% tax money is lost, kaput. You can't take it as a deduction or a credit on your income taxes. EXCEPT, maybe and subject to various people's various opinions, that is "only" for money on "income you exclude" which I interpret as "money you exclude from your reporting on your 1040." Which means for people who are just contributing to an ira and/or letting such money accumulate, they can do nothing with the 15% tax of those ira dividends. However, if you are WITHDRAWING money from your ira and therefore paying tax on this previously tax-deferred money, that is now (they say) "included money" and you can maybe, possibly, some people say, claim somehow that the money you are withdrawing consists of Canadian dividend income and therefore you can and are permitted to use the 15% Canadian tax of ira dividends as a deduction or credit. Seems kind of arcane and maybe not important, unless maybe you're over 70, have to make withdrawals from an ira, and have lots of Canadian trust income. Searching SI will bring up a link to a person who has explained the steps he undertook to get this deduction. I've no idea if it's legal or correct.