Pennsylvania and RRSPs

[mchuchra]

For US Expats in Canada considering moving to the US... There are apparently 13 states (CA, NJ, PA, MD, ND, CT, KS...) , which do not follow the US/Canada tax treaty. This YT video does highlight this issue at minute 3:18, for example.

I have seen several online sources that say California does not treat RRSPs as tax deferred accounts, so you "need to report on earnings/dividends/cap gains EVERY year.

What are the ramifications to state taxes for residents of Pennsylvania, for example, for Canadian RRSP accounts? Is it the same as California? That would seem like a giant PIA, since the RRSP administrators surely won't provide annual tax statements.

[nelsona]

we have not heard of any RRSP issues regarding PA.

[mchuchra]

Thanks Nelsona. How about for New Jersey?

[mchuchra]

Thanks Nelsona. What about New Jersey?

[nelsona]

California is the only state which taxes internal RRSP income, year over year.

[btaylor70]

While I agree with you in principle, that is not the position many accounting firms (especially large ones) take. I do realize in the case of California there is a ruling precedence hence an obligation to follow whereas in the other states it is vague and has not been tested.I live in one of the vague states and was forced to pay state tax on RRSP income. I tried reasoning with my accounting firm but they wouldn't listen.

[nelsona]

You vaguely didn't mention which state.

[btaylor70]

NJ

[nelsona]

Its never been made absolutely clear that NJ regs specify RRSP internal income. I believe someone mistakenly asked NJ about this, and got the obvious response that "sure, we want your tax money". But, I've never seen the reg that allows them to include that specific income that is not included on the Fed 1040.

[MIKE2000Z28]

This is interesting because im from PA and might want to move back. I couldn't find much specifically on anything rrsp related. I do see PA says it does not follow us tax treaties for income. Clearly i would list any rrsp withdrawals as income. It would be hard or near impossible to track income within the plan as I see it. Since it's the feds that have the treaty and information, how would the state level agency know since I'm guessing they don't talk or have time to unless there is a specific law aimed at Canadian Rrsp accounts.

Any update to this?

[nelsona]

No. PA follows what is on your IRS tax return, other than specific additions exclusions that they might have. Those additions and exclusions. if any would be clearly spelled out in that tax guide.

[MIKE2000Z28]

[quote=nelsona post_id=530977 time=1727959938 user_id=30]
No. PA follows what is on your IRS tax return, other than specific additions exclusions that they might have. Those additions and exclusions. if any would be clearly spelled out in that tax guide.
[/quote]

So they don't tax yearly gains within the rrsp like California? If it's just the 3.04 percent income tax, that is fine.

[nelsona]

Not unless they specifically mention it.