Back filing 8891s under SDOP

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rubyruby
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Location: United States

Back filing 8891s under SDOP

Post by rubyruby »

After careful consideration, in order to get my US tax situation sorted, I have decided to enter the Streamlined Domestic Offshore Procedures.

Question about 8891.
i am about to file my 2013 with extension and 8891, in addition to the prior three years as required by SDOP.
Because I am submitting 1040X for 2010,2011,2012 what do I put for 6a-c on the 2013 8891?
Do we make the election to defer tax on the 2010 8891 and then for the other years put 2010 for 6b on their 8891s?

Thanks.
nelsona
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Post by nelsona »

Well, if you want to avoid taxation on the RRSP income, you should back file 8891 as many years as you need to, and put the first year as your election year.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
ikeaidea
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Post by ikeaidea »

Now IRS just post the new rule for RRSP. Automatically defer income, and eliminate the 8891 retroactively? But 114A and 8938 still apply.

Nelsona, please advice.
nelsona
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Post by nelsona »

link, please.
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ikeaidea
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Post by ikeaidea »

Issue Number: IR-2014-97

Inside This Issue


IRS Simplifies Procedures for Favorable Tax Treatment on Canadian Retirement Plans and Annual Reporting Requirements

WASHINGTON ― The Internal Revenue Service today made it easier for taxpayers who hold interests in either of two popular Canadian retirement plans to get favorable U.S. tax treatment and took additional steps to simplify procedures for U.S. taxpayers with these plans.

As part of this, the IRS provided retroactive relief to eligible taxpayers who failed to properly choose this benefit in the past. In addition, the IRS is eliminating a special annual reporting requirement that has long applied to taxpayers with these retirement plans.

Under this change, many Americans and Canadians with registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) now automatically qualify for tax deferral similar to that available to participants in U.S. individual retirement accounts (IRAs) and 401(k) plans. In general, U.S. citizens and resident aliens qualify for this special treatment as long as they filed and continue to file U.S. returns for any year they held an interest in an RRSP or RRIF and include any distributions as income on their U.S. returns.

The change relates to a longstanding provision in the U.S.-Canada tax treaty that enables U.S. citizens and resident aliens to defer tax on income accruing in their RRSP or RRIF until it is distributed. Otherwise, U.S. tax is due each year on this income, even if it is not distributed.

In the past, however, taxpayers generally would get tax deferral by attaching Form 8891 to their return and choosing this tax treaty benefit, something many eligible taxpayers failed to do. Before today’s change, a primary way to correct this omission and retroactively obtain the treaty benefit was to request a private letter ruling from the IRS, a costly and often time-consuming process.

Many taxpayers also failed to comply with another requirement; namely that they file Form 8891 each year reporting details about each RRSP and RRIF, including contributions made, income earned and distributions made. This requirement applied regardless of whether they chose the special tax treatment. The IRS is eliminating Form 8891, and taxpayers are no longer required to file this form for any year, past or present.

The revenue procedure does not modify any other U.S. reporting requirements that may apply under the Bank Secrecy Act (BSA) and section 6038D. See FinCEN Form 114 due by June 30 of each year, and Form 8938 attached to a U.S. income tax return for more information about the reporting requirements under the BSA and section 6038D. Different reporting thresholds and special rules apply to each of these forms.

Further details on today’s change can be found in Revenue Procedure 2014-55, posted on IRS.gov.
nelsona
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Post by nelsona »

we'll have to wait until Rev Proc 2014-55 is realeased.

While ONE of the functions of 8891 is tax deferral, it also serves other functions:
1. It substitutes Form 3520, as a trust reporting mechanism, Will one need to file 3520 instead?
2. It is a means of reporting income when either a distribiution is made, or internal income of a non-deferred plan. Is non-rdeferral still an option?
3. It avoids itemized reporting for Form 8938.

The IR only adresses late elections.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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