How to claim RRSP as 1040NR filer

[jhuang1213]

Hi there,
I am working for a US company in MI as commuter and contribute RSP thru company's group RSP plan which is set-up thru its canadian branch - that is the unique benefit for comany's canadian workers in lieu of company's regular 401k plan for US worker.

Now my question is: in company's W-2, the RSP contribution is not shown since payroll does not want to change my W-2and still looking into this new tax treaty change. How should I claim the RSP contribution on my 1040NR - I could not find any applicable line in "Adjusted Gross Income" section.

Also since W-2 did not reflect my RSP contribution, my only record is the annual statement from broker showing my contribution and company matches for 2009. Is that statement good enough document for IRS or I need fill out certain IRS forms?

Thanks
JH

[nelsona]

While a 401(K) contribution that you would make under these circumstances would be tax deductible in US (as always) and now in canada (by treaty change) in 2009, the treaty does not specifically address a US employee of a US firm (who has not been transferred from canada) making a deductible RRSP contribution.

By my interpretation of the treaty -- and the technical expalnation --, the only time IRS will allow a deduction for RRSP contributions is
a) employee contributions to an RRSP made by a US taxpayer living and in canada
b) a short-term transferee from a Cdn firm, now living , who continues to contributte to an RRSP arrangement thru the US employer.

In my opinion, if you need a tax deduction in US on these contributions, they should be made into a 401(K).

The previous arrangement, whereby the employer paid into RRSP was indeed generous, but, with the new treaty, is no longer required.

Canada, who have outlined the rules for 401(K) contribution deductions, have similar policy badsed on the treaty:

401(K) contributions are only deductible for Cdns living in Canada and working in US, or for short-term transferees from US.


Please note that this is my opinion. Youyr firm should be loooking into how their employees are to be taxed in this situation. The fact that they opff-loaded this to their Cdn branch should tell you that they don't think IRS would accept this as an expense on their books.

[nelsona]

Just in case you were to need to properly deduct an RRSP contribution, you would do this by reducing the wage (which would be shown on a T4, noty a w-2), by the appropriate RRSP contribution, on your 1040, and then attach an 8833 describing why you reduced your wages, refering to the treaty article.

To properly deduct 401)k) contributions on your Cdn return, CRA has created 2 fomrs that need to be submitted (one for commuter living in canada, and one for transferree living in canada),as I have prviously discussed.

[jhuang1213]

Thanks for your clear explanation. Nelsona. I think I am with the group which working in USA and living in Canada(commuter) and company has RSP plan for us. I will use 8833 form to declare this deduction then.

This forum has been very helpful to my issues over the past 10+ years in my cross-border employment and taxation.

Cheers.
JH

[nelsona]

As Isaid, the treaty doe NOT cover your exact situation, so let us know what happens.