Suppose a US citizen owns a RRIF and defers US tax by filing Form 8891. At death, the RRIF passes to a Canadian spouse who has no US status. Does spouse pay US tax on income deferred through the Form 8891? It seems like the income should be recaptured for US purposes, but the mechanics of how the IRS would collect the tax are blurred. Please share your thoughts.
Dave
US Tax on Inherited RRIF With Form 8891 Deferral
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davidstreicher
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No. The RRIF would be part of the estate, and subject to tax an that basis, but the transfer would be income tax-free in US (since it would be in Canada), and there would be no future tax liability for the spouse.
That is one of thereasons that non-citizen spouses have a lower estae tax exemption.
That is one of thereasons that non-citizen spouses have a lower estae tax exemption.
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