How to Report an NR4 Slip on a US Tax Return

The NR4 slip is Canada’s information return for income paid to non-residents. It reports the gross income paid, the Part XIII tax withheld, and the income type (identified by a numeric code in Box 14). If you are a US resident receiving Canadian income, you will receive NR4 slips from Canadian payers (banks, pension plans, RRSP/RRIF custodians, brokerages, tenants or property managers). The NR4 is the non-resident equivalent of the T4, T5, and T4A slips that Canadian residents receive.

On your US return, the income from the NR4 is reported on the appropriate line or schedule, the Canadian withholding generates a foreign tax credit on Form 1116, and all amounts are converted from Canadian dollars to US dollars.

NR4 Box 14 codes and US reporting

The Box 14 income type code tells you what kind of income was paid. Here are the most common codes for US-resident recipients:

NR4 Code	Income type	US form/schedule
04	Rental income (gross)	Schedule E (if filing Section 216 Canadian return for net income, the NR4 still shows gross)
11	Interest from Canadian sources	Schedule B, line 1
12	Dividends (eligible)	Schedule B, line 5. Qualified dividend treatment depends on whether the Canadian dividend meets the IRC 1(h)(11) qualified dividend rules
13	Dividends (other than eligible)	Schedule B, line 5. Generally ordinary dividend rate
16	Royalties	Schedule E or Schedule C, depending on whether a trade or business
28	Other income	Schedule 1, line 8z (depends on the specific income type)
30	Pension (public service)	1040, line 5a/5b (pension and annuity income)
31	Pension (private)	1040, line 5a/5b
32	Pension (lump-sum)	1040, line 5a/5b
33	Death benefit	1040, line 5a/5b or Schedule 1
40	RRSP income	1040, line 5a/5b. Report with treaty election under Article XVIII(7)
41	RRIF income	1040, line 5a/5b
42	RRSP lump-sum	1040, line 5a/5b
43	Retiring allowance (non-qualifying)	Schedule 1, line 8z
47	OAS	Generally not reported (treaty gives exclusive US taxing rights, so no Canadian withholding should apply)
48	CPP/QPP	Generally not reported (same treaty treatment as OAS)

Currency conversion

All amounts on the NR4 are in Canadian dollars. The US return requires US dollars.

Exchange rate options:

1. Date-of-payment rate: convert each payment using the Bank of Canada (or IRS) exchange rate on the date the payment was received. This is the most accurate method for irregular or large payments.

2. Annual average rate: for regular payments received throughout the year (monthly pension, quarterly dividends), use the IRS annual average exchange rate for the year. The IRS publishes these rates. This is simpler and CRA/IRS both accept it for consistent periodic payments.

Apply the same exchange rate method to both the income (Box 16) and the withholding (Box 17).

Claiming the FTC for Canadian withholding

The Part XIII tax withheld (Box 17 of the NR4) is a Canadian tax paid on Canadian-source income. It qualifies for the foreign tax credit under IRC 901, claimed on Form 1116.

FTC category: the Canadian withholding is allocated to the appropriate FTC basket:

• Passive category: interest, dividends, rental income, royalties (most NR4 income types)
• General category: pension income, employment income (less common on NR4)

FTC limitation: the credit is limited to the US tax attributable to the foreign-source income (IRC 904(a)). If the Canadian withholding rate (15% treaty rate) is lower than the effective US rate on the same income, the full credit is usable. If the withholding rate exceeds the US rate (possible at lower income levels), the excess carries forward for 10 years.

Form 1116 reporting: list Canada as the foreign country, the income amount in USD, and the tax paid in USD. If you have NR4 income in multiple categories (passive dividends and general pension), you may need separate Form 1116s for each category.

Common situations

RRSP/RRIF withdrawals (codes 40, 41, 42): Canada withholds Part XIII tax on the distribution (25% default, 15% treaty rate for periodic payments, 0% on RRIF minimum withdrawals). Report the gross distribution on the US return as pension income. The treaty election under Article XVIII(7) defers US tax on RRSP/RRIF income until distribution, so only report the actual distribution received (not the annual income inside the RRSP). Claim the FTC for the Canadian withholding.

Dividends from Canadian corporations (codes 12, 13): Canada withholds Part XIII at 15% (treaty rate for portfolio dividends) or 5% (if you own 10%+ of the corporation). Report the gross dividend on Schedule B. Determine whether the dividend qualifies as a “qualified dividend” for the preferential US rate (generally yes for dividends from Canadian corporations that are eligible for treaty benefits, per IRC 1(h)(11)(C)). Claim the FTC.

Rental income (code 04): Canada withholds Part XIII at 25% of gross rent (no treaty reduction for rental income). If you file a Section 216 Canadian return to be taxed on net rental income, you may receive a refund of the excess withholding from CRA. On the US return, report the net rental income on Schedule E (gross rent minus expenses). The FTC is for the net Canadian tax after the Section 216 refund, not the gross withholding.

Pension income (codes 30, 31, 32): Canada withholds Part XIII at 15% (treaty rate for periodic pension payments) or 25% (lump sums). Report on the pension line of the 1040. Claim the FTC. Consider whether Section 217 produces a lower Canadian rate than the flat withholding.

What should I do next?

Collect all NR4 slips for the year. Map each one to the correct US form/schedule using the Box 14 code. Convert to USD. Complete Form 1116 for the FTC. If you have Canadian rental income, consider the Section 216 election to reduce the Canadian tax below the 25% gross withholding.

• Part XIII withholding: what gets withheld when you leave Canada?, the full withholding framework
• Form 1116: why isn’t my FTC dollar for dollar?, the FTC limitation mechanics
• CPP and OAS received in the US, special treaty treatment that may eliminate the NR4

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.