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nelsona,

Appreciate your help very much! You always give precise and detail answer.

Springflower

Hi,

I am US resident and not work now. I am doing my 2010 Canadian tax with section 217 return now. I withdrew ~$20k RRSP in 2010.

Quesstion
Can I claim child's amount? I have two young children.

I feel sad when you said that our tax returns are in awful shape. I am trying to fix them.

We both did put the departure date Dec. 8th 2008 on our 2008 Canadian return. Since it was almost the end of the year, I didn’t pay attention to it. I think the quicktax software should take care of the ...

Hi Nelsona,

We both chose to file as full year Canadian resident in 2008 because we thought we had no other choice. I should come to this forum earlier.

In 2009, we live in US all year. My husband has no income from Canada and worked in US. I have $20k employment income, most of it is vacation ...

Sorry to make you confused. I hold Canada mutual fund (~$300k) in a joint US brokerage account, which was transferred in kind from Canadian brokerage account in 2009. Those funds are difficult to manage. I should have converted them to ETF. Now I plan to sell them to take advantage of the low ...

Hi Nelsona,

I have another question regarding my husband’s residence status in 2008 in Canada.

As mentioned (see more detail information above), my husband left the Canada in Feb. 2nd 2008, I left Canada in Dec. 8th 2008. My daughter and my parents lived with my husband in a rental home most of ...

Hi Nelsona,

Thank you a million for valuable advice.

1. So I will only withdraw ~$10k yearly while not working. And Leave the rest of them till retirement.

3. So you don’t think it is a good idea to move our joint account in US to my husband’s own account? We may want to adjust some ...

Thank you so much for your suggestion. It is great help for me.

I am not family with 2555. Will do research and try it out.

Hi Nelsona,

Thanks very much for quick reply.

1. If I start to work after 2 years, what is best strategy for our RRSP? Wait until retirement after 15 years or start RRSP collapse ASAP? Suppose we collapse the rrsp soon and split in a few years. If we take the FTC (I haven’t done research for ...

What is the best way to file our 2008 us tax return?

We are Canadian citizens, US residents now. My husband arrived in US and started to work on Feb. 25 2008. I lived in US for 5 month (Mar~June,Dec.) and lived in Canada for 7 month (Jan.~Feb, July~Nov.). I left Canada and arrived in US in Dec. 8th ...

BTW, we live in Georgia with state tax 6%. And our marginal tax rate is 25%+6%, our effective federal tax rate is ~10%+6% in 2009.

springflower

Hi Nelsona,

Sorry that the questions are long. I have done more research on previous posts. Now come up the following less questions.

1. I know I can withdraw ~$15k every year with section 217 while I don’t work for 2~3 years. Beside that, what is best strategy for our RRSP? Wait until ...

This forum is extremely helpful for me. Thanks for nelsona and other persons.

After read the border guide “ten key reasons to remove your RRSP from Canadaâ€￾ and “withdraw your RRSP freeâ€￾. I think it may be a good idea for us to collapse our RRSPs ASAP. I have contacted a cross border company, they told me that the consultation fee is about $2000 if they design a strategy for us to collapse RRSP and reduce tax. I think $2000 is a big money in current economy and not sure if it is worth to pay it.

Some background:
We are Canadian citizens, US residents. We have submitted EB2 us green card application recently. We left Canada in Dec. 2008. My husband is on H1b work visa and I am currently H4 visa and don’t work. Husband is 40 years old and I am 39 years old. We have two young children.

Husband info:
Salary plus bonus $150K annual income, contribute $10k to 401k yearly
RRSP value at time of our arrival in US (2008): ~US$70K (market), US$82K (book)
Current RRSP value: ~US$105K

My info:
not work now, $0 salary income. May start work and have salary after 2 years.
My RRSP value at time of our arrival in US (2008): ~US$115K (market), US$135K (book)
Current RRSP value: ~US$180K

Other info:
Our major deductions include our two kids, 2 parents, and mortgage (interest ~ $17k).

We have a non retirement joint account in us with $400k which generate about $10k dividend income.

I may go back to work with $80k~100k salary after 2 years (80% chance) or continue as a housewife (20% chance). We will probably live in US in near future. As in long term, we are not sure yet. Maybe we will stay in US (70% chance) or move back to Canada or Asian country after 5~10 years. I may want to retire early after 10 years and my husband may work part time after 10~15 years.

After a lot of research about RRSP withdrawal, I have some very basic idea how to withdraw our rrsp. However I know this area is quite complicated. I don’t want to screw it up. Please advise if these ideas are sound.

Question 1
Previously, we need to calculate the taxable rrsp income as “current market price – book value at departureâ€￾. However the fifth protocol changed as “current market price – market value at departure. Can I elect to use previous method as it is beneficial for me?


1. My rrsp

Step a.
Since I don’t work and no us salary income now, so I will withdraw about $15K~20k every year and file section 217 to get back most from the 25% withholding tax. And I can file NR5 earlier to reduce the withholding tax.

Question 2
Since we have joint account in us which generate dividend income, this will be a problem. How can I reduce this us investment income? Can I just say this is my husband’s income and not report it? Or I have to transfer money from this joint account to my husband’s account?

Step b.
If I start to work after 2 years, then I convert my RRSP into RRIF and withdraw periodically (twice minimum allowed) with 15% tax. Then claim foreign tax credit or deduction to reduce the taxable RRSP income tax. I guess I need to do a simulation on turbo tax to find if deduction or foreign tax credit works better. This periodical withdrawal will take long time, for example 10 years.

Question 3
If we have unused foreign tax credit to carry forward every year and in the end, any idea how to use it up? If I can generate enough foreign general income, then I can use it. But how?

Question 4
After 10 years, there will be small amount in RRIF. Then shall we just withdraw more and pay 25% withholding tax?

Step c.
If I stop work and no income, then I use method in step a again to withdraw.

2. My husband RRSP
He will use step b to withdraw his RRSP.

Any problem on our RRSP withdrawal on above plan? Any better suggestions?

More questions.
Question 5
I don’t know that I have to file the 8891 and TDF until now. I need to file them for 2008 and 2009. If I elect to defer to pay undistributed tax within RRSP on 8891, will it affect my RRSP withdrawal plan? It is irrevocable, so I have to be very careful.

Question 6
We have a non retirement account in US as I mentioned above. Is there any way we can use it to offset our RRSP withholding tax paid for RRSP withdrawal.

Question 7
I am not very clear about the RRIF periodical withdrawal yet. Anyone can point to a link which explains it in detail or with example?

Thank you very much in advance!
Springflower

Right. Thank you!

Hong

I am doing some research about RRSP withdrawal and see this post. I have a quesiton.

"So, we are talking about $35K in US taxable income, and $80K in Cdn taxes". Why $80K in Cdn taxes? From their example, I think the taxable amount in Canada is $125k+$200K = $325K if they withdraw all their RRSP. I ...