I am a Canadian, living in the US as a Permanent Resident. I cashed in an RRSP last year, have the form that shows the 25% non-resident tax withhold and my accountant here is telling me the following:
1) I owe the difference between the 25% already paid and my US tax rate
2) I owe a 10% early withdrawal penalty to IRS for cashing it out before I'm 59.5
I can almost understand #1 (not happy about it, but whatever) however #2 makes no sense to me at all. These RRSP funds were CDN dollars contributed before I left Canada 5 years ago and have not contributed to it with any US funds (can't continue to contribute to RRSP as non-resident) So how can IRS charge this penalty?
Wondering if my accountant doesn't understand something properly? should I seek a second opinion or does this sound right to people?
Thanks
RRSP Withdrawal while living in US
Moderator: Mark T Serbinski CA CPA
Then, as you know, your US tax liability is only on the growth portion. You report the gross pre-tax on 7a of form 8891 (which you ahve filed every year) and the taxable portion on 7b, and this translates to 16a/16b of the 1040.
RRSPs are NOT subject to early withdrawal penalties.
You are dealing with someone who is clueless about cross-border matters, so be careful.
RRSPs are NOT subject to early withdrawal penalties.
You are dealing with someone who is clueless about cross-border matters, so be careful.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing