How to report NR4 on 1040

April · Post by **April** » Tue Apr 08, 2014 2:25 pm

Hello...

My husband is on a TN status, moved to US in 2011 (Canadian citizen)... back in 2011 tax year, before we moved to the US, he accidentally made an over contribution on his RRSP. The over contribution were taken out in March 2013 from his RRSP account. There was no tax withheld by CRA (he has a T3012A). I called CRA and they said to file 5013-R (T1) for this but there will be no tax owing.

My question is, how would he report this on his US return... as a Taxable Part of RRSP Distribution on Form 8891 or on a Form 1099 or somewhere else?

Thanks

nelsona · Post by **nelsona** » Tue Apr 08, 2014 2:33 pm

It is not taxable in canada, therefore it is not taxable in US, by treaty.
So, simply write the amount in 7a, and 0 in 7b. If you wish, it would be agood idea to attach an 8833 expalining this and refering to the treaty article XVIII(1).

In your personal records, reduce your "cost basis" for your RRSP, for future determination of US taxation of future withdrawals.

I don't see the need to file anything in canada. You have an NR4, thus you are a non-resident and RRSP income is never reported by non-resident, even if it is taxable. The NR tax is the end of it.

April · Post by **April** » Tue Apr 08, 2014 5:24 pm

thanks for your reply.... I will look into 8833... but to clarify though... the withdrawal is not subject to tax as income? or besides entering it on 7a... do I need to enter it somewhere else on the 1040?

With regards to the tax return in Canada, I wasn't too confident the rep knew what he was talking about... he also told me I need to file a return for interests from Canadian sources...thanks for your guidance.

nelsona · Post by **nelsona** » Tue Apr 08, 2014 5:29 pm

You are writing 8833 in order to claim that 7(b) on 8891 is zero, by treaty.
7(a) and 7(b) get put on 16(a) and 16(b) of 1040

April · Post by **April** » Tue Apr 08, 2014 8:44 pm

got it... thanks

1 more question though... should we be paying a penalty to CRA for this... the excess is about 23k (I know, bad advise from TD waterhouse), I guess I should have asked CRA rep when I spoke to him earlier too, but then again, their info is not too reliable

nelsona · Post by **nelsona** » Tue Apr 08, 2014 9:37 pm

Well, there is a difference between an overcontribution and a contribution that one could not deduct. If he had contribution room, it would not be subject to penalty.

His assessments would tell him that he obver contributed or not. It is CRA that determines this.