15% Foreign Tax (Canada) on Roth dividends

[Guest ark-win]

Part of my Roth portfolio contains a Canadian stock that pays regular dividends. The Canadian government witholds 15% of the dividends which is refundable since I'm an American citizen & living in the US. Since these earnings are tax free, how can I get these witheld earnings back into my Roth account without it appearing as an excess contribution?

[mbozek]

The IRA owner will have to file a canadian income tax return for the IRA requesting a refund.

[Guest ark-win]

I know how to get the money refunded to me (Application for refund of non-resident part XIII tax withheld - Form # NR&-R-E). I'd like to know how to put it back into my Roth since it's part of the earnings. If you just send the refund check in to the administrator, it will appear as excess contributions for that year. It's an IRS issue but I can't seem to get an answer from them.

[mbozek]

The refund request is filed by the IRA since it is a separate taxpayer from whom the tax was withheld and is signed by the appropriate representative of the IRA. The refund should be payable to the custodian of the IRA ( ABC trust Co, as custodian for the IRA of John Jones or the IRA for John Jones). How did you plan to file for the refund?

[Guest ark-win]

So, in my case T. Rowe Price is the custodian of my Roth IRA. Are you saying that they have to file and also sign the request for refund?

[mbozek]

You need to read the custodial agreement with Price to see what duties they will perform. You may have to sign the refund request as the fiduciary of the IRA.

[Bruce Steiner]

Why do you think that the dividends are exempt from Canadian tax?

[Guest Gregory]

It's been 5 or 6 years, but I recall only ERISA qualified plans could file tax reclaim to Canada. Go to Canada Revenue Agency's website noted below. They used to require a copy of the Opinion or Determination Letter, copy of Trust and their reclaim form signed by the Trustee.

http://www.cra-arc.gc.ca/menu-e.html