I'm a US citizen who is on a 3yr work permit in Canada.
I cashed out my 401k in January 2014, while residing in Canada. I believe I had the US hold 27% and took the 10% penalty on about 62k; received roughly 38k if i remember correctly.
I recently filed my 2014 taxes and was told that since i received that money in Canada I had to count it as taxable income, but since I hadn't paid CA taxes on it at all yet, i owed roughly 18k to the CA government.
I was already taxed on the 401k from the US before receiving the money; doesn't feel right that I also had to pay 18k out of pocket to the Canadian government on money I was already taxed on .
I understand their is some foreign tax credit, but I still owed 1600 to the US government for my US tax return.
Does this sound feasible; is there any layman terms that can help me understand this -
Thanks in advance!
I cashed out my 401k in January 2014, while residing in Canada. I believe I had the US hold 27% and took the 10% penalty on about 62k; received roughly 38k if i remember correctly.
I recently filed my 2014 taxes and was told that since i received that money in Canada I had to count it as taxable income, but since I hadn't paid CA taxes on it at all yet, i owed roughly 18k to the CA government.
I was already taxed on the 401k from the US before receiving the money; doesn't feel right that I also had to pay 18k out of pocket to the Canadian government on money I was already taxed on .
I understand their is some foreign tax credit, but I still owed 1600 to the US government for my US tax return.
Does this sound feasible; is there any layman terms that can help me understand this -
Thanks in advance!