taxabke income on RRIF withdrawal under election form 8891

blairgoates · Post by **blairgoates** » Fri Sep 02, 2011 2:04 pm

What is the taxable income on a RRIF withdrawal if the RRIF earns more that the withdrawan amount ? Is it the total earnings for the year ? The total amount withdrawn ? Or some other amount. I have searched all over forum and I don't get it. PLEASE HELP !

thanks

nelsona · Post by **nelsona** » Fri Sep 02, 2011 4:17 pm

I've described the various scenarios several times, but, if I need to review, fir a couple of questions:

1. during all the time you have contributed to RRSP, were you US citzien, or did you move to US at some point and become US citzien afterwards.

2. Have you elected to defer taxation on internal RRSP/RRIF income in the past?

blairgoates · Post by **blairgoates** » Fri Sep 02, 2011 7:41 pm

I have spent hours reviewing your posts and can't seem to get a grip on this.

He is a US citizen living in Canada for entire life.

He has not filed and will be filing the past six years.

Nelsona I really appreciate you contributions and I hate to ask you to repeat things....if you can just provide some links that would be great ! Thanks

nelsona · Post by **nelsona** » Sat Sep 03, 2011 9:37 am

The first thing you need to do is determine YOUR contributions in USD over all years.

This becomes your INVESTMENT in the RRIF. If you cannot determine this, then you wil lsimply have to report the entire withdrawl as taxable in US every year.

nelsona · Post by **nelsona** » Sat Sep 03, 2011 9:41 am

If you can figure this, they the amount that is taxable in US every year is the ratio of the investment over the value at time of first withdrawal on the year.

And example:

You contributed over the life of your RRSP 100K (all figures in USD).
The value at beginning of 2011 was 250K.

You take out, say 25K. 10K would not be taxable, 15K would.

next year your tax-free inestment portion would now be 90K (100K minus the 10K you exccluded from tax this year), and so on until you had no more RRIF.

nelsona · Post by **nelsona** » Sat Sep 03, 2011 9:43 am

That is if you elect to defer tax.

If you don't then the taxable portion is all interest, all distributions, and all cap gain triggered by sales within the RRIF, whether you took that much out or not.

blairgoates · Post by **blairgoates** » Sun Sep 04, 2011 1:05 pm

Thanks Nelsona.....I get it now !

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taxabke income on RRIF withdrawal under election form 8891

taxabke income on RRIF withdrawal under election form 8891

thanks Nelsona

thanks Nelsona