Why would dorseyjf be filing a Canadian return if he/she had no Canadian filing obligation?However, depending on the size of the inheritance and your other overseas assets, you may be required to file a Canadian report, probably CRA Form T1135 named (confusingly) "Foreign Income Verification Statement."
I'm assuming you have a Canadian filing obligation, per my assumptions above.
If the distribution was cash and the recipient brought that cash to Canada, why would anything be reportable in the US?You don't. There is no inheritance tax in Canada. A US estate will pay any US tax due before distribution to the heirs.
If the distribution is in the form of a capital asset (shares, real property, etc.) you should record the fair market value when it is transferred to you as that will be your cost basis going forward.
If the distribution is cash and you invest it, any future income will be taxable in both Canada and the US.
That is just plain wrong information; TFSAs receive no favorable treatment under the treaty. They may be Canadian tax-free but any income the account generates is fully US taxable. The only way that I can think of off the top of my head that there could be no US tax liability is if the TFSA held stocks which paid no dividends. In such a case no tax would be owed until a stock was sold triggering a capital gain. You need to research this thoroughly before making your decision. Depending on the type of TFSA you choose the US reporting alone can make them undesirable, let alone the tax. Most cross border specialists in the know advise duals to avoid them.We were told last year by a US tax preparer that the TFSA accounts that we already have must be reported on but that there is no U.S. tax liability under the treaty.
The amount involved is under $100,000 U.S. and was received in cash, net of 10% withholding.
I can explain that, sort of. Been through this confusing bit of tax stuff myself.It also seems strange that 10% of your inheritance was withheld. Normally the estate pays any taxes due before distributing and no tax is owed by the heir.