Moved to US: Can I still contribute to my RRSP this year?

[cantax14]

Hello,

I have moved to the US this year and broken Canadian ties. I will become a US tax resident in the 2014 year.

I still have RRSP contribution room as I have not yet contributed for 2014. Can I still contribute to my RRSP to fill it up for this year, even though I've already left? (The money comes from my existing Canadian-source income).

If so, how do I properly report this contribution on my 8891?

Thanks!

[nelsona]

What is the reason you would do this?

You will not get much if any Cdn tax deduction (remember, even for Cdn residents it never makes sense to nmake an RRSP contribution that lowers your income below the first tax bracket).

And the contribution will not be tax deductible in US (since it is a private RRSP), so if you end up filing full year (you will) and use foreign tax credits, you will simply end up paying more US tax on your Cdn income than you should.

But, as to reporting on 8891: you don't.

If you elect to defer taxation (you should), you stop before the line that asks for contributions. Thus you do not report contributions on 8891. You have to track these yourself, just as you have to track your book value on the day you become taxable in US ( 1/1/2014, or whatever date you determine is your arrival date for dual-status year).

[nelsona]

Oh, the reason you don;t want to contribute is not simply because you will get small deduction on your Cdn departure return, it is that when you withdraw you will pay at least 25% Cdn NR tax on that income, and probablyly a little more considering the US tax.