Canada US Citizen on Canada work permit; cashed out 401k (double tax?)

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I'm a US citizen who is on a 3yr work permit in Canada.

I cashed out my 401k in January 2014, while residing in Canada. I believe I had the US hold 27% and took the 10% penalty on about 62k; received roughly 38k if i remember correctly.

I recently filed my 2014 taxes and was told that since i received that money in Canada I had to count it as taxable income, but since I hadn't paid CA taxes on it at all yet, i owed roughly 18k to the CA government.

I was already taxed on the 401k from the US before receiving the money; doesn't feel right that I also had to pay 18k out of pocket to the Canadian government on money I was already taxed on .

I understand their is some foreign tax credit, but I still owed 1600 to the US government for my US tax return.

Does this sound feasible; is there any layman terms that can help me understand this -


Thanks in advance!
 

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