Anonymous asked in Business & FinanceTaxesUnited States · 1 month ago

Can there be direct withholding from bank deposit interests in Canadian tax law? And the US?

I just was wondering on whether in Canada there are direct tax withholdings when it comes to passive income or whether people are still required to file tax returns. 

Here where I live there's no need to file tax returns as long as one does not work on their own or has not a proper business or doesn't gain from rent etc.

How does it work in Canada? Can a bank account holder ask a bank to withhold tax directly from the source?

1 Answer

  • John
    Lv 6
    1 month ago

    In the US, one cannot voluntarily have income tax withheld from interest.  There is something called backup withholding, but that is only done by the bank upon being notified by the IRS.  The IRS usually orders backup withholding when a person's name and social security number do not match SSA records.  I'm not familiar with Canadian law.

    • ...Show all comments
    • Sweet1 month agoReport

      I don't know, that's why I'm asking. By the way I intended that the IRS knows what it's earned relatively to bank interests, since the bank itself declares to the IRS.

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