Bank issued a T5 instead of NR4 this year. I’m a non-resident of Canada this year, and will be filing as a resident Tax alien of the US. Is any action necessary, or can I just use T5 in place of NR4 when filing US taxes?
Bank issued t5 instead of NR4
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Dear Leo,
Thank you for your question. Since you are a non-resident of Canada and will be filing as a resident tax alien in the US, there are a few important considerations regarding the T5 versus NR4:
- Difference Between T5 and NR4
- A T5 (Statement of Investment Income) is typically issued to Canadian residents and does not indicate withholding tax.
- An NR4 (Statement of Amounts Paid or Credited to Non-Residents) is specifically for non-residents and reports both income and any Canadian withholding tax deducted at source.
- Potential Issues With Using a T5
- Since you are a non-resident, Canadian financial institutions are supposed to apply withholding tax (typically 15% or 25%, depending on the type of income and tax treaty provisions).
- If your bank mistakenly issued a T5 instead of an NR4, it might mean they did not withhold the appropriate tax, which could lead to issues with the Canada Revenue Agency (CRA).
- What Action to Take
- You may want to contact your bank to verify if withholding tax was applied and request a corrected NR4 if necessary.
- If tax was withheld correctly but reported on a T5 instead of an NR4, you may still be able to use the T5 when filing your US taxes, but this could cause complications in reporting to both the IRS and CRA.
- If no withholding tax was applied, you may have an obligation to remit taxes to the CRA.
- Filing Your US Taxes
- The IRS generally requires reporting of worldwide income and allows for foreign tax credits on taxes paid to Canada.
- If an NR4 is issued correctly, it will help document any Canadian taxes paid, making your US filing more straightforward.
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