Serbinski Accounting Firms

Jonhello …

For your wife’s 2015 tax return, the amount of the RRSP contributions is the amount that was contributed to an RRSP in the period March 03 to December 31 2015, plus the amount that was contributed in the period January 01 2016 to February 29 2016. Both of these amounts together represent the RRSP contribution in respect of “tax yearâ€￾ 2015.

RRSP contributions, made in the first 60 days of any year, count as part of the contribution in respect of the previous “tax yearâ€￾. So the $3,000 that was contributed in January 2016 is not “forâ€￾ 2016, it is “forâ€￾ 2015.

The maximum that you can deduct on Line 208 on your 2015 tax return is the 2015 deduction limit, if you have at least that much available in current or previously-un-deducted contributions.

You say that the deduction limit for 2015 is $3,901 in this case.

So, if you contributed $1,329 + $3,000 = $4,329 (between March 03 2015 and February 29 2016), then you could deduct $3,901 of this on the 2015 tax return, and carry forward $428 of un-deducted contributions to the 2016 tax return, to be deducted a year from now.

You do these calculations by completing Schedule 7 of the tax return.

I am assuming that the contribution of $1,329 made in 2015 was made on, or after, March 03 2015? If it was made before that, it should have been included on the 2014 tax return.

Luckily, you are allowed to over-contribute $2,000 without paying a tax penalty, so you won’t have to pay a penalty for over-contributing the $428 – you can just carry it forward.

I am taking your case to be as simple as stated in your question – so, unless there are hidden complications, such as other carry-forward amounts, you should be fine.

If you are going to make RRSP contributions between March 01 2016 and March 01 2017, for the 2016 tax year and the 2016 tax return, use the 2016 deduction limit that will be shown on your upcoming 2015 Notice of Assessment, minus $428, when planning your maximum upcoming-year RRSP contributions, to get back to even.

So, what should you do? Read the instructions for Line 208 in the General Income Tax Guide – it is quite easy to read and to follow. It tells you how to fill in Schedule 7. If you want to get into greater detail, read the CRA’s definitive RRSP guide, Publication T4040 – all on the CRA website.

eeyore ... the Form 8938 instructions for 2015, page 5, top of page, in left-hand column ... provides the answer ... that accounts exempted in IGA, are not exempted from Form 8938 reporting ...

Hi Dirk, these questions were discussed in this forum a couple of months ago, so you could search the forum if you wanted to see that, and more, about Part VI Form 8938. But the simple answers you want are as follows: 8a. Scotiabank is the issuer. 8b. Scotiabank is a corporation. 8c. Scotiabank is a...

marge,

For the purposes of determining the Form 8938 filing threshold (page 3 of Form 8938 instructions) you look at the total value of the assets on the last day of the tax year or the total value “at any timeâ€￾ during the year. It seems clear that, for that purpose, you would definitely not double count your transferor and transferee accounts, because on “any given dayâ€￾ or “at any timeâ€￾ (including the date of transfer) the money is in either the transferor account or the transferee account only, and not both.

For the purposes of Line 2 in Part II of Form 8938, it is less clear. It just asks for the maximum value of all assets.

Meanwhile, you have to report in Part VI each individual asset with its own individual maximum value at any time during the year (Form 8938 instructions, middle of page 5, and Part VI Line 4 instructions, page 9).

So, yes, if you add up all of the “maximum values at any time during the yearâ€￾ of each individual asset reported in Part VI, then the sum of the transferor and transferee accounts would be approximately double of what the true aggregate amount was on any given day, as you say.

So that makes it unclear what to report on Line 2 of Part II. I had the same question in my mind when I was filing my 2014 Form 8938, since I did some RRSP account transfers as well.

It seemed to me (in the absence of clearer instructions for Line 2 in Part II) that it would make the most sense to calculate the amount to be reported on Line 2 of Part II in the same manner as the way the amount would be calculated for determining the reporting threshold – in other words, no double counting the transferor/transferee accounts – just figuring the maximum value of the aggregate assets on any given day or “at any timeâ€￾.

When I reported each individual RRSP asset in Part VI, I reported the account transfer dates in Line 3. For the transferor accounts, I showed the date of transfer on Line 3b as the date asset disposed of, and for the transferee accounts, I showed the date of transfer (same exact day) on Line 3a as the date asset acquired. That way, it was recorded that only one of the accounts (either the transferor account or the transferee account) was in existence on any one given day.

Anyway, that’s what I did. Hope that it might help you decide what to do

Bill M ... about a month ago (April 13) I saw a post where someone said that RRSP income (by extension, RRIF income, presumably) can be entered in the FEC (Foreign Employer Compensation) worksheet of the software. Search "FEC" in the forum if you want to see the post. I have never done it ...

Hi Filo … the terminology that the IRS used in their response to you, namely to say that Part III of Schedule B is “to gather information and to ‘remind’ taxpayers about filing additional tax forms if required to do soâ€￾, is interesting – also, that they said that you ‘may’ answer Line 8 as “NOâ€￾ for your RRIF.

I have looked in the Internal Revenue Manual a few times, Part 3 “Submission Processingâ€￾, to see what it might say about Line 8 Schedule B. The manual is extremely detailed and prescriptive about what IRS processing staff is expecting to see on every line of every form, and what kinds of tax filer submissions represent errors, and so on, and it certainly mentions the Line 7 items of Schedule B, but it doesn’t say anything about Line 8 at all, from what I have been able to ascertain. One could, perhaps, wonder about the importance of Line 8 – it is literally just a ‘reminder’ question?

In any event, I do know that the IRS has never questioned my “NOâ€￾ responses on Line 8, over 10 years in which I filed Forms 8891 previously. I presume that they never questioned your “NOâ€￾ responses on Line 8 over “several decadesâ€￾, either. I also have never read anything to suggest that the “YESâ€￾ responses that are presumably provided by most other people have ever resulted in any questions or requests for forms, either. I would speculate, from that, that a tax filer’s notation on Line 8 Schedule B might not necessarily result in any rigorous IRS cross-checking to see if the notation there matches the filing, or lack of filing, of other forms.

So I guess that you would be fine with a “NOâ€￾ on Line 8 Schedule B for your RRIF, if that’s what you prefer (you mentioned in a previous post that you would prefer to keep doing that) – you certainly now, personally, have the answer from the IRS ETLA to allow you to do that – so no problem.

I would also guess that no one would have any issues if they say, or continue to say, “YESâ€￾ on Line 8 for any foreign trust, even if it’s only an RRSP or an RRIF, since “YESâ€￾ would be a literally correct answer, and I would understand that almost everyone else has been doing that successfully for a long time with no questions asked – and even if a question was asked, there would be an easy logical answer – so no problem.

Filo, re your post of April 14 …

Please allow me to clarify … yes, MGeorge and I said that for Line 8b in Part VI of Form 8938 we specified “corporationâ€￾ and not “trustâ€￾.

What we said there, was that the RRSP plan custodian (the “issuerâ€￾), the name of which was reported on Line 8a above the “issuerâ€￾ check box, was a “corporationâ€￾ … we did not say that the RRSP was a “corporationâ€￾.

RRSPs are still “foreign trustsâ€￾ for IRS purposes …

Your post confuses the reporting on Line 8b in Part VI of Form 8938 with what should be reported on Line 8 of Schedule B, but these are different concepts. Please read carefully what we said about Line 8b of Part VI of Form 8938.

But, on the subject of Line 8 of Schedule B … you don’t necessarily have to change your past practice … depends on what advice you want to take on this.

You say that you have always (for several decades) marked Line 8 on Schedule B as “NOâ€￾ even though you owned an RRSP or RRIF. Most comments that have ever been posted about this would disagree with that, including just about everything that has ever been said about it in this forum, and in virtually every other tax practitioner’s on-line post … most everybody says that you must mark Line 8 on Schedule B as “YESâ€￾ if you own an RRSP or RRIF, because an RRSP/RRIF is a “foreign trustâ€￾, and thus the answer is (literally) that “YESâ€￾ you own a “foreign trustâ€￾.

Notwithstanding that, I personally have also always shown “NOâ€￾ on Line 8 of Schedule B, even though I owned RRSPs and previously submitted Forms 8891 which clearly showed that I owned RRSPs (“foreign trustsâ€￾) – so I actually have always done what you say you have always done. I twice sent in a written question to the IRS on this, and I twice received a written response from the IRS (Email Tax Law Assistance) that told me to say “NOâ€￾ on Line 8 of Schedule B if the only “foreign trustâ€￾ that I had was an RRSP – what they said was that I should check “YESâ€￾ on Line 8 of Schedule B “ONLY IFâ€￾ there was a “foreign trustâ€￾ that was reportable on Form 3520, and that I should check “NOâ€￾ if I did not have a “foreign trustâ€￾ that was reportable on Form 3520. So that is why I have always checked “NOâ€￾ on Line 8 of Schedule B, even though I held RRSP “foreign trustsâ€￾ for every year that I have ever filed – and I have never had a problem with that.

But, like I said, most people would not agree with that – but it does provide an opening for you to continue doing what you always did.

However, again, please look carefully at what we said about “corporationâ€￾ versus “trustâ€￾ on Line 8b in Part VI of Form 8938 and don’t confuse that with what should be reported on Schedule B …

trm, if you go on the CRA website, look up Income Tax Folio S5-F2-C1 which provides all details of the CRA foreign tax credit. I believe that paragraph 1.6 of this folio will give a favourable answer to your question.

SM, my own experience is only with student kids in Canada, and I certainly don’t have all of the answers to all of your questions, but I will try to give you some thought starters based on my Canada-only experience, and some references to look at if you wish to do so. A student at a Canadian unive...

taxeve, various websites indicate that Canada Savings Bonds are "issued by" the Bank of Canada, and that the Bank of Canada is a crown "corporation" owned by the Government of Canada.

Over a number of years, advice in this forum, and on other tax-advice websites, has indicated that CPP retirement benefits and OAS benefits received by a US Citizen residing in Canada are taxable only in Canada, and not taxable on the US tax return.

It has been indicated that the Canadian-resident USC should show the amount of the benefits on Line 20a of Form 1040, and show $0 on Line 20b. Optionally, or perhaps recommended, the USC can indicate on an accompanying Form 8833 that the amount of the CPP and OAS benefit has been reduced to $0 by treaty – Article XVIII (5) is commonly cited as the reference.

I am still somewhat perplexed by the current wording of Article XVIII (5), and wondering how it operates to exclude or render non-taxable, on a US tax return, the CPP/OAS income received by a USC residing in Canada, because the wording of Article XVIII (5) has, since the implementation of the Fourth Protocol in 1997, referred solely to social security benefits from one Contracting State being paid to a resident of the other Contracting State as being taxable only in that other State. (Much older versions of the treaty did make specific special reference to US Citizens).

I can’t quite rationalize how I can cite Article XVIII (5) as being the authority for a USC resident in Canada to exclude (reduce to $0) Canadian social security income on the US tax return, when the article doesn’t appear to address this situation. Am I not reading it right, or am I just being too technical about the wording of the article? Should it just be considered that the “spirit and intentâ€￾ of the article is to render social security benefits to be taxable only in the country in which the recipient lives? Thank for any thoughts on this …

Presumably many people have successfully filed under the recommended process, probably citing this article, and have not had any problems? I am just looking now at reporting CPP income for the first time.

Other than a treaty article to hang my hat on, there is a Q&A on the IRS website which says that: “If the recipient (of CPP/OAS) is a US Citizen who is a resident of Canada, the benefits are taxable only in Canadaâ€￾. So that’s a good back-up reference, I suppose.

MGeorge,

For my RRSP reporting in Part VI of Form 8938, I have reported my RRSP accounts “in wholeâ€￾ just like they had been reported on Form 8891 in previous years (that is, one Part VI report for each RRSP account).

I described “the assetâ€￾ on Line 1 as being a Canadian RRSP.

For Line 8 items, I included the name and address of the RRSP plan custodian, just like had been reported on Form 8891 previously.

Under Line 8a, I showed the plan custodian as being the “issuerâ€￾, while you showed it as being the “counterpartyâ€￾, so we’re a bit apart on that one.

On Line 8b, I showed “corporationâ€￾ just like you did, for the same reason as you said. I have seen other advice on the internet that suggested that Line 8b should say “trustâ€￾ because an RRSP is a trust – however, my plan custodian is a corporation, as I see it, just like you said.

According to the official terminology used by the CRA, the RRSP plan custodian is referred to as "the issuerâ€￾ of the RRSP. I realize that that doesn’t mean much when filing an IRS form, but it did influence me to some extent in making my selection of “issuerâ€￾ in the face of ambiguity.

As well, since I didn’t want to get into “any possibilityâ€￾ of having to break my RRSPs down into separate Part VI reports for each individual financial product in each RRSP, I thought it would be better to say that the RRSP custodian was the “issuerâ€￾ of the RRSP (“the assetâ€￾ on Line 1), because I figured if I said “counterpartyâ€￾ it could possibly invite questions about who any of the other parties might be.

Anyway, that’s just my personal take on it. In the absence of clear instructions or definitions, it seems open for interpretation.

beaconhill, Similar to you, I sent in 7 years’ worth of paper FBARs to the IRS Detroit Computing Center P.O. Box address for FBAR submissions, in April 2011 (for 2004-2009 retro years, plus the then current year 2010), with a covering letter explaining why I was filing late. I did not hear anythin...

Nelsona asks, January 17, "will you revert to 3520, report the RRSP as an entity, or report the holdings individually". Section 5 of RP-2014-55 seems to say that reporting under IRC Section 6048 (Form 3520) is not required. Also that plan custodians are not required to file Form 3520-A. In...