Loss on Form 8891 not transferred to Form 8949

eubankjd · Post by **eubankjd** » Sat Feb 09, 2013 2:51 pm

I had both gains and losses on my Forms 8891. Only the interest, dividends, and gains were transferred to Form 8949.

Am I correct that my losses should also have transferred? (My loss was much less than my gain.)

Thanks!
Jen

nelsona · Post by **nelsona** » Sat Feb 09, 2013 5:25 pm

Not sure how you would have a loss. Are you not electing to defer taxation? If so, then you do not report any gains or losses on a yearly basis.

eubankjd · Post by **eubankjd** » Sat Feb 16, 2013 9:02 am

I'm not deferring losses because my US taxable income today is much less than it will be once I retire. I currently get the foreign earned income credit, but will lose that at retirement. I've only had taxable US income for the few years where the FX rate has caused "excess" US income.

nelsona · Post by **nelsona** » Sat Feb 16, 2013 10:48 am

But you will still have Cdn tax to pay then, so you will use foreign tax credit.

Not electing to defer now may not be costing you tax now, but it most certainly won't save you any when it comes time to atke your RRSP. You will merely have more excess Cdn tax.

eubankjd · Post by **eubankjd** » Sat Feb 16, 2013 10:52 am

I'm not concerned about my Canadian tax. I may or may not have Canadian tax when I retire --- depends on where I live. Since I generally do not pay US tax today -- and I will tomorrow -- it is definately a tax savings to recognize my Canadian RRSP revenue/gains today on my US return. So...I still need a response to my original question.

nelsona · Post by **nelsona** » Sat Feb 16, 2013 3:27 pm

You will have RRSP tax wherever you live. Surely you knew this.

nelsona · Post by **nelsona** » Sat Feb 16, 2013 3:27 pm

It is a softwatre issue. contact the software maker.

nelsona · Post by **nelsona** » Sat Feb 16, 2013 3:30 pm

I trust you are no itemizing your investments oin 8891. You are only supposed to give net figures (total interst, total gains/loss, total dividends) for eah account.

eubankjd · Post by **eubankjd** » Sat Feb 16, 2013 7:26 pm

Yes, I know I'll be taxed. My question was -- why was my software transferring gains/income -- but not losses. And no, I'm not itemizing. One several accounts I had income and/or a net gain and one one a net loss. Only the gains/income show on my return. To show the loss, I have to override the software. I was looking for some support since there don't seem to be any instructions for Form 8891.

nelsona · Post by **nelsona** » Sat Feb 16, 2013 10:05 pm

software.... not tax advice.

nelsona · Post by **nelsona** » Sat Feb 16, 2013 10:10 pm

back to your decision to NOT defer taxation....

Any more insight as to why you would choose this? You are obviously causing yourself trouble having to report this income, and in the long-run, and short-term it is not saving you any tax.

And the 2 reasons you gave (won't be able to use 2555, and maight not live in Canada) don't really make sense.

I'm not here just to answer your questions, but to help people not make the same mistakes that other posters are making.

eubankjd · Post by **eubankjd** » Sun Feb 17, 2013 9:50 am

Let's take this example:
2007 through 2009 - Recognize $5K Form 8891 income on US return that [i]could [/i]have been deferred. No US tax is due since income (with exemptions and deductions) is below threshold.

2010 through 2011 - Recognize $5K Form 8891 income on US return that [i]could [/i]have been deferred. Some US tax is due since FX rates are near par.

In total, paying US tax on only $10K of the $25K earned. Since this is RRSP income, no CAD tax is due, so there are no tax credits available.

If I had chosen to defer the $25K earnings until retirement, this income will be fully taxable in the US when it's withdrawan, therefore the full $25K will be taxed.

How can it be better to have the full $25K taxed than to only have $10K taxed?

nelsona · Post by **nelsona** » Sun Feb 17, 2013 7:01 pm

Because the 25K (and more) will eventually be taxed in canada, and you will have more than enough tax to use as a credit on your US return.

As I said, you are not saving tax now, you are not savinf tax in future, and you are giving yourself the headache of reporting and tracking your various distributions and trades.