This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.
For the past 20 years I have been living in Canada. Before my retirement, my income was far below the Foreign Earned Income Exclusion limit, i.e. I did not have to pay US tax on my income. However, I used part of that income to purchase an RRSP (e.g. $10000). When I take distribution, is the principle ($10000) also excluded from taxation? If not, doesn’t that mean I have to pay tax on the income that was originally excluded, i.e. my nontaxable income ($10000) in effect has become taxable income?
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