I checked the finiki and there's no topic on this (hint, nudge, hint )
Does anyone how this works specifically? My current understanding is:
-don't hold it in an RRSP/TFSA
-30-35-39% (it's all over the place on the interent) of the dividend will be withheld (i.e. taxed). How much of that am I able to get back through the foreign tax credit?
What happens when I sell the security itself? Does the IRS take a cut as well at 30-35-39% rate or is it the CRA that does with Canadian tax rules?
Thanks for the insight!
MLP taxation
Re: MLP taxation
The dividend is withheld at the highest US federal tax bracket. It was 35% when I looked at a MLP a couple of years ago, I guess its 39.6% now.
You also get a US K1 tax form, which if I remember right gives you the added bonus of having to file a US return.
You also get a US K1 tax form, which if I remember right gives you the added bonus of having to file a US return.
Re: MLP taxation
My understanding is that there's no K1 for Canadian residents/Canadian accounts...
Re: MLP taxation
Beware the tax tribulations of U.S. MLPs by John Heinzl. Free article at GlobeInvestor.
Bottom line: Those juicy MLP yields might not look so tempting after you factor in the tax you’ll have to pay – and the extra work that may be required.