I am a Canadian Citizen working in USA for since May 2004. In the years 2004-2005, I have made about 20000 USD (roughly 25000 CD)
contributions to 401(K)/IRA in USA. Since I have maintained my family in Canada, I am considered Factual Resident of Canada and I file taxes under Form 1040 in USA and T-1 General in Canada.
Revenue Canada on Re-Assessment of my returns has not allowed corresponding deduction in lieu of contributing in to RRSPs and I have
been charged about 10OOO CD as additional taxes for the years 2004-2005.
The fact that I had rolled over all my past 401(K)/IRA contributions in year 2008 in to a new 401(K)/IRA Fidelity Account(s); Can I take advantage of newly signed ( Dec 15, 2008) Fifth Protocol to Canada-US Income Tax Treaty and deduct the unused IRA/401(K)of the years 2004-2005 in the year 2008 return in Canada as my RRSP deduction limit has stayed unused and is upto about 35K (Refer CRA Pub T-4040)
Deduction of past 401(K)/IRA contribution on Canadian Return
Moderator: Mark T Serbinski CA CPA
Since YOUR contributions were not deductible in canada, they will eventually be witdrawn without tax in canad (only your contributions, not your employers', nor any growth.
I'm looking into the new "limits" enacted in the treaty, but at first glance, they are yearly limits, and can only be claimed in the current calendar year.
You have RRSP room, and can thus contribute to your personal RRSP, but these won't give rise to any deduction on your US return.
Your 401(K) contribs prior to jan 01, 2009, are not deductible in any fashion on your Cdn return.
I'm looking into the new "limits" enacted in the treaty, but at first glance, they are yearly limits, and can only be claimed in the current calendar year.
You have RRSP room, and can thus contribute to your personal RRSP, but these won't give rise to any deduction on your US return.
Your 401(K) contribs prior to jan 01, 2009, are not deductible in any fashion on your Cdn return.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Deduction of past 401(K)/IRA contribution on Canadian Return
Please see the following article from the website:
http://www.cra-arc.gc.ca/E/pub/tg/t4040/t4040-08e.pdf
Contributions you can deduct for 2008
For 2008, you can deduct contributions you made to your RRSP from January 1, 1991, to March 1, 2009. You can deduct these contributions if you did not deduct them for any other year, and if they are not more than your RRSP deduction limit for 2008. Even if you can no longer contribute to your RRSP in 2008 because of your age, you can deduct, up to your RRSP deduction limit, the contributions made in a previous year while your age permitted.
As I understand from your response that the recoprocity for the Retirement Plans as described the new treaty is in effect from Jan 01, 2009 where in IRS and CRA would reciprocally/mutually treat Contributions to RRSP and 401(K)/IRA as deferred income for the tax returns. So in the tax year 2009 can one claim unused 401(K)/IRA Contributions from the past years eg. 2004-2008 based on the above article from CRA Publication RRSPs and Other Registered Plans for Retirement 2008 T4040(E) Rev. 08.
Please let me know as that would help me deduct past unclaimed 401(K)/IRA Contributions against my unused RRSP limit and help me reduce taxes in Canada for the year 2009 return.
Thanks,
http://www.cra-arc.gc.ca/E/pub/tg/t4040/t4040-08e.pdf
Contributions you can deduct for 2008
For 2008, you can deduct contributions you made to your RRSP from January 1, 1991, to March 1, 2009. You can deduct these contributions if you did not deduct them for any other year, and if they are not more than your RRSP deduction limit for 2008. Even if you can no longer contribute to your RRSP in 2008 because of your age, you can deduct, up to your RRSP deduction limit, the contributions made in a previous year while your age permitted.
As I understand from your response that the recoprocity for the Retirement Plans as described the new treaty is in effect from Jan 01, 2009 where in IRS and CRA would reciprocally/mutually treat Contributions to RRSP and 401(K)/IRA as deferred income for the tax returns. So in the tax year 2009 can one claim unused 401(K)/IRA Contributions from the past years eg. 2004-2008 based on the above article from CRA Publication RRSPs and Other Registered Plans for Retirement 2008 T4040(E) Rev. 08.
Please let me know as that would help me deduct past unclaimed 401(K)/IRA Contributions against my unused RRSP limit and help me reduce taxes in Canada for the year 2009 return.
Thanks,
RRSP contributions are NOT 401(k) contributions. Just like 401(K) contributions are NOT RRSP contributions. Nothing in the treaty protocol chnaged that.
The treaty merely states that 401(K) contributions made during the year may be deducted subject to limits.
The treaty merely states that 401(K) contributions made during the year may be deducted subject to limits.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best