RRSP Cash-out w/Loss?

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toad
Posts: 64
Joined: Sun Nov 28, 2010 8:28 pm

RRSP Cash-out w/Loss?

Post by toad »

Quick one here:

Became US Resident in 2010. On that date RRSP was worth $1000 CDN/$900 USD (example exchange rate only). RRSP was monthly interest bearing account.

RRSP paid out interest every month in 7 years, but no withdrawals made from account. Unsure if Form 8891 filed, but non-issue since new ruling.

Cashed out RRSP in 2017. On that date RRSP was worth $1100 CDN/$850 USD. (Disregarding witholding tax)

For US Tax: No income to declare? Can actually declare a loss of $50 somewhere?
nelsona
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Re: RRSP Cash-out w/Loss?

Post by nelsona »

Yes.
First the withheld tax can be included on Schedule A as foreign tax.
The terminal loss can be included in miscellaneous deduction on schedule A
The gross income goes on line 16a of 1040, while you would report zero on line 16b.
So for this to be of any value, you need to itemize deductions, and you must have miscellaneous deductions which exceed 2% of your income.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
toad
Posts: 64
Joined: Sun Nov 28, 2010 8:28 pm

Re: RRSP Cash-out w/Loss?

Post by toad »

Thank you for the clear answer.

re: withheld tax - what happens if a Section 217 is then filed, effectively reducing the foreign tax that was paid to $0? Would you then to include this as some form of income in 2018?
nelsona
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Re: RRSP Cash-out w/Loss?

Post by nelsona »

You would have to amend your schedule A for 2017. If you think you will be doing a tax returns in 2 countries, you should be doing them together, to avoid this situation.

I assume you are a non-working spouse?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
toad
Posts: 64
Joined: Sun Nov 28, 2010 8:28 pm

Re: RRSP Cash-out w/Loss?

Post by toad »

Ok. Was asking because I thought a difference in accrual vs. actual paid could make a difference.

Correct, spouse is non-working. (And previously only worked in canada while us resident as commuter)

Does the tax have to be pro-rated in any way? Ie. Pro-rate tax based on increase in Canadian value from initial contribution?
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: RRSP Cash-out w/Loss?

Post by nelsona »

The tax paid is in USD on the day it was withheld. Any withheld amount that is later refunded simply reduces the tax "paid" on that original date.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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