# Form 1099-DIV



## Pro.wolf (Apr 4, 2016)

I receive form 1099-Div for some stocks I have in the USA (received thru work as part of my income). I report these dive des in my Canadian tax as foreign income and I am assessed taxes. 

I am reporting them in my US taxes and I am also been tax on them (understandably)

Cant use foreign tax credit to mitigate taxes assessed by the US because is not foreign income (also believe is dividends are considered passive income, I just learn this by reading some material in the web)


US federal taxes are not been withhold, I called the company that manage the stocks and they told me they don't need to withhold federal tax if not explicitly required by IRS. They gave me the option to voluntarily request taxes to be withhold (28% amount) 

To be able to claim foreign tax credit in Canada for these dividends I am thinking I should request the voluntary withholding. The dividend amount is not big (couple hundred dollars) but I hope stocks will do better in the future (company is relatively new) and then I will be double taxed for a considerable amount

Has anyone in this forum experienced the same situation? Has anyone voluntary requested tax to be withhold in dividends? Do you think this would allow me to claim foreign tax credit in Canada and reduce the amount of double taxation?


Thanks for your time reading this long email and any I out you might have


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## BBCWatcher (Dec 28, 2012)

Generally you should not request withholding if you have the option to avoid it (which you do). You have to file a tax return anyway, I assume, so you will determine your U.S. tax rate on that income at that time. It could very well be a zero tax rate if, for example, the dividends are a few thousand dollars or less, you don't have any other passive income, and your Canadian income is shielded via the Foreign Earned Income Exclusion. Also, 28% is more than even the top tax rate on qualified dividends, so that's probably too high anyway. On top of all that, you lose the interest you would earn on having those funds in hand. The IRS doesn't pay interest on tax refunds they owe you.

If you think you do owe some U.S. tax on that income, no problem, make estimated tax payments then file your U.S. tax return per normal. You can still take credit for those taxes on your Canadian tax return.


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