Remember, you have two issues here:
(a) reporting foreign accounts. If you have foreign accounts that at any time in the year are aggregately valued at $10,000, you have to report ALL foreign accounts of a TD F 90-22.1 form. This applies to any accounts of any type. This is filed separately from your tax return.
If the toatl foreign accounts never exceeds US$10K in a year, then you don't have to file that form in that year.
For 2004, you do need to file the form for all your accounts. You can file multiple accounts on one form. You will also need to file the same form in 2005, even if you sell off everthing today, since for some period in 2005 you had foreign accounts with more than US$10K.
(b) yearly election to defer the accrued income in your RRSP. This is done by a statement that followed IRS Rev. Proc 89-45 until 2002 when it was replaced by RP 2002-23and will be replaced by Form 8891 this year.
This has nothing to do with value. It has to do with electing to defer the income generated in your RRSP. This MUST be done every year, unless you elect never to defer, in which case you have to include the income (interest, dividends, cap gains) on your US tax return every year.
So, at a minimum, you have failed to report the RRSP deferral every year, and at worse, have decided not to defer and have not been including your taxable income on your US taxes. This must be corrected nefore you decide to collapse your RRSP, otherwise IRS will likely impose penalties and interest back to 2000 on your RRSP.
As to what you should do with your RRSP now, you might as well hold onto it, but why in a GIC? Why not invest in mutual funds or stocks? You can do this by moving your account to TD waterhouse in Canada.
Your other choice is to cash out, pay the 25% tax in Canada, use the 25% as a tax deduction on 1040, reporting the growth only since you arrived. You would need to fix your previous IRS returns (see above) before doing this.
<i>nelsona non grata</i>
Please read/post about RRSP in US Here!!!
Moderator: Mark T Serbinski CA CPA
Thanks for the response. I have been putting more information together and I seem to be getting in even deeper...
UPDATED:
2000: Move to US from Canada. Leave < 10000 US$ in RRSP and about $70 in stock. Tax returns prepared professionally for both countries. Despite the sum of my foreign investments, they were reported. 8833 reports the RRSP with my old employer only, no mention of my other RRSP account (about $2000) or my stock. The only statement made to defer income (referencing Article XVIII) was on the 8833 and did not include any amounts (it wasn't anything like the example deferrals on canadatotwincities.com...)
2001: The portion of my RRSP that was with my old employer was moved to a GIC with RBC. Total foreign investment still < 10000US$. Prepared my own US taxes. Did not report my foreign investments because the total was <$10000. Moved my pension from my former employer to a locked in RRSP. (Is this considered a contribution? Is the pension considered income?)
2002: Did my own taxes, total still <$10000 -no reporting or deferral.
2003: Did my own taxes, with locked in RRSP and exchange rate, total is about 11 000US$ -Did not report accounts or defer RRSPs
2004: No mistakes yet... I haven't filed.
Questions:
Do I need to add 2000 to the list of years in need of correction?
How do I treat the transfer of my canadian pension to a locked in RRSP while a resident of the US?
When doing the corrections, should the following documents cover me?
2000: 1040X, additional 8833 for missed account (Do I need a separate election to defer statement?).
2001: 1040X, revised schedule B, 8833 (or election to defer?) -any changes to 1040 caused by pension transfer? Any other forms apply?
2002: 1040X, revised schedule B, statement per Proc. 2002-23
2003: 1040X, revised schedule B, statement per Proc. 2002-23, any way or need to do a TD F 90-22.1?
2004: 1040 with 8891, TD F 90-22.1
Does the treaty statement (per canadatotwincities.com examples) replace the 8833? Should that form have been used in 2000 at all?
How does form 3520 and/or 3520A apply to me?
Thanks for any help.... I am starting to wish I had just stayed in Canada...
Tom
UPDATED:
2000: Move to US from Canada. Leave < 10000 US$ in RRSP and about $70 in stock. Tax returns prepared professionally for both countries. Despite the sum of my foreign investments, they were reported. 8833 reports the RRSP with my old employer only, no mention of my other RRSP account (about $2000) or my stock. The only statement made to defer income (referencing Article XVIII) was on the 8833 and did not include any amounts (it wasn't anything like the example deferrals on canadatotwincities.com...)
2001: The portion of my RRSP that was with my old employer was moved to a GIC with RBC. Total foreign investment still < 10000US$. Prepared my own US taxes. Did not report my foreign investments because the total was <$10000. Moved my pension from my former employer to a locked in RRSP. (Is this considered a contribution? Is the pension considered income?)
2002: Did my own taxes, total still <$10000 -no reporting or deferral.
2003: Did my own taxes, with locked in RRSP and exchange rate, total is about 11 000US$ -Did not report accounts or defer RRSPs
2004: No mistakes yet... I haven't filed.
Questions:
Do I need to add 2000 to the list of years in need of correction?
How do I treat the transfer of my canadian pension to a locked in RRSP while a resident of the US?
When doing the corrections, should the following documents cover me?
2000: 1040X, additional 8833 for missed account (Do I need a separate election to defer statement?).
2001: 1040X, revised schedule B, 8833 (or election to defer?) -any changes to 1040 caused by pension transfer? Any other forms apply?
2002: 1040X, revised schedule B, statement per Proc. 2002-23
2003: 1040X, revised schedule B, statement per Proc. 2002-23, any way or need to do a TD F 90-22.1?
2004: 1040 with 8891, TD F 90-22.1
Does the treaty statement (per canadatotwincities.com examples) replace the 8833? Should that form have been used in 2000 at all?
How does form 3520 and/or 3520A apply to me?
Thanks for any help.... I am starting to wish I had just stayed in Canada...
Tom
Not to get too deep:
8833 is not the preferred method of reporting a deferral of RRSP income. A statement in compliance of Rev Proc 2002-23 is. You should ammend all returns, including 2000 to comply with RP 02-23.
Your Scheb B should indicate that you have foreign accounts, and have a foreign trust.
A pension rollover is reportable under RP 02-23, but is not a taxable event. It is a transfer, and the procedure for reporting clearly outlined in RP 02-23 and at the sample statements I prepared on the website you refer to.
If you file 02-23 staements for all years, you wil not need 3520 or 3520-A.
If the new 8891 form is released in time for you to file use it instead of rp satement for 2004
You proably should have filed a TD F 90 form every year, but I do not believe in back-filing these. Simply file one for all your accounts this and every year from now on.
<i>nelsona non grata</i>
8833 is not the preferred method of reporting a deferral of RRSP income. A statement in compliance of Rev Proc 2002-23 is. You should ammend all returns, including 2000 to comply with RP 02-23.
Your Scheb B should indicate that you have foreign accounts, and have a foreign trust.
A pension rollover is reportable under RP 02-23, but is not a taxable event. It is a transfer, and the procedure for reporting clearly outlined in RP 02-23 and at the sample statements I prepared on the website you refer to.
If you file 02-23 staements for all years, you wil not need 3520 or 3520-A.
If the new 8891 form is released in time for you to file use it instead of rp satement for 2004
You proably should have filed a TD F 90 form every year, but I do not believe in back-filing these. Simply file one for all your accounts this and every year from now on.
<i>nelsona non grata</i>
-
yessirnosir
- Posts: 2
- Joined: Tue Feb 22, 2005 9:43 am
<b>Reporting Requirements/Tax Basis for Conversion of Canadian DC Pension to RRSP?</b>
I am a Canadian who has been in US since July 2000. Until 2004 I was still employed by a Canadian company (in the US), and continued to be a member of that company's Canadian defined contribution pension plan. I have Canadian RRSPs that I have reported to the US each year on TD-F-90-22.1 forms, but I did not report the pension plan -- which I believe (hope!) was the correct thing to do.
Upon leaving the employment of the Canadian company in 2004 (but staying in the US), my Canadian pension plan was rolled over into a Locked In RRSP. So when I report my RRSP accounts for year 2004 to the US government, I will have a new RRSP account that did not exist when I reported my RRSP accounts for prior years. So I am concerned that this new account will attract attention unless I provide additional information about how it came into existence. So my questions are:
1) what documentation should I provide, if any, when I send in this year's foreign account report regarding the new locked-in RRSP account?, and
2) what basis will the US government use for taxation of this account when I cash it in? There was significant appreciation of the value of the account in the period 2000-2004 after I became a US resident, but while it was still a pension plan. Do I have to reconstruct the activity inside the pension plan back to the date I entered the US? Or can I just use the account value on the date of the rollover into the RRSP account?
Thanks in advance.
I am a Canadian who has been in US since July 2000. Until 2004 I was still employed by a Canadian company (in the US), and continued to be a member of that company's Canadian defined contribution pension plan. I have Canadian RRSPs that I have reported to the US each year on TD-F-90-22.1 forms, but I did not report the pension plan -- which I believe (hope!) was the correct thing to do.
Upon leaving the employment of the Canadian company in 2004 (but staying in the US), my Canadian pension plan was rolled over into a Locked In RRSP. So when I report my RRSP accounts for year 2004 to the US government, I will have a new RRSP account that did not exist when I reported my RRSP accounts for prior years. So I am concerned that this new account will attract attention unless I provide additional information about how it came into existence. So my questions are:
1) what documentation should I provide, if any, when I send in this year's foreign account report regarding the new locked-in RRSP account?, and
2) what basis will the US government use for taxation of this account when I cash it in? There was significant appreciation of the value of the account in the period 2000-2004 after I became a US resident, but while it was still a pension plan. Do I have to reconstruct the activity inside the pension plan back to the date I entered the US? Or can I just use the account value on the date of the rollover into the RRSP account?
Thanks in advance.
You should know that merely reporting the existence of RRSP etc on TD form is <i>insufficient</i> in terms of absolving yourself of yearly taxation and trust reporting requirements.
You need to ba making Rev Proc 2002-23 statements for all your RRSP, RPP and LIRA accounts. This is the only thing that shields you from yearly taxation of RRSP/LIRA, and the only way to avoid having to file 3520 and/or 3520-A forms.
TD form, though required, is simply not enough.
As to basis, you will need to determine the basis when you became US resident.
You may add to that basis any contributions that were not deductible form your 1040 wages (ie. if you made a contribution that could not be excluded from your wages). If no such contribution exists, then none can be added to the basis established in 2000. All the appreciation since 2000 was made while you were a US resident, thus you should expect to ba taxed in US on such appreciation, just as if you had held an RRSP for that time.
<i>nelsona non grata</i>
You need to ba making Rev Proc 2002-23 statements for all your RRSP, RPP and LIRA accounts. This is the only thing that shields you from yearly taxation of RRSP/LIRA, and the only way to avoid having to file 3520 and/or 3520-A forms.
TD form, though required, is simply not enough.
As to basis, you will need to determine the basis when you became US resident.
You may add to that basis any contributions that were not deductible form your 1040 wages (ie. if you made a contribution that could not be excluded from your wages). If no such contribution exists, then none can be added to the basis established in 2000. All the appreciation since 2000 was made while you were a US resident, thus you should expect to ba taxed in US on such appreciation, just as if you had held an RRSP for that time.
<i>nelsona non grata</i>
-
yessirnosir
- Posts: 2
- Joined: Tue Feb 22, 2005 9:43 am
thanks nelsona... I have submitted statements per Rev Proc 2002-23 with my annual tax returns. But I have only included my RRSP accounts, not the DC pension. My tax returns were prepared by a major accounting firm with a global expatriate tax practice, and they were aware of my pension plan but chose only to report the RRSP's -- I don't know why. Do you think this was an error, and should I now file amended statements including the pension plan?
There is a debate as to whether RPPs should also have been reported (RP 02-23 says yes, I generally say no).
If they have not, it is not of any import at this point. You mentionned TD form without saying anything about RP, so that was my concern.
Regardless, your basis will still only be what was the value when you entered US, and now of course you will have to RP 02-23 (or Form 8891) this account.
<i>nelsona non grata</i>
If they have not, it is not of any import at this point. You mentionned TD form without saying anything about RP, so that was my concern.
Regardless, your basis will still only be what was the value when you entered US, and now of course you will have to RP 02-23 (or Form 8891) this account.
<i>nelsona non grata</i>
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote"><i>Originally posted by nelsona</i>
Remember, you have two issues here:
(a) reporting foreign accounts. If you have foreign accounts that at any time in the year are aggregately valued at $10,000, you have to report ALL foreign accounts of a TD F 90-22.1 form. This applies to any accounts of any type. This is filed separately from your tax return.
If the toatl foreign accounts never exceeds US$10K in a year, then you don't have to file that form in that year.
For 2004, you do need to file the form for all your accounts. You can file multiple accounts on one form. You will also need to file the same form in 2005, even if you sell off everthing today, since for some period in 2005 you had foreign accounts with more than US$10K.
(b) yearly election to defer the accrued income in your RRSP. This is done by a statement that followed IRS Rev. Proc 89-45 until 2002 when it was replaced by RP 2002-23and will be replaced by Form 8891 this year.
This has nothing to do with value. It has to do with electing to defer the income generated in your RRSP. This MUST be done every year, unless you elect never to defer, in which case you have to include the income (interest, dividends, cap gains) on your US tax return every year.
So, at a minimum, you have failed to report the RRSP deferral every year, and at worse, have decided not to defer and have not been including your taxable income on your US taxes. This must be corrected nefore you decide to collapse your RRSP, otherwise IRS will likely impose penalties and interest back to 2000 on your RRSP.
As to what you should do with your RRSP now, you might as well hold onto it, but why in a GIC? Why not invest in mutual funds or stocks? You can do this by moving your account to TD waterhouse in Canada.
Your other choice is to cash out, pay the 25% tax in Canada, use the 25% as a tax deduction on 1040, reporting the growth only since you arrived. You would need to fix your previous IRS returns (see above) before doing this.
<i>nelsona non grata</i>
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Remember, you have two issues here:
(a) reporting foreign accounts. If you have foreign accounts that at any time in the year are aggregately valued at $10,000, you have to report ALL foreign accounts of a TD F 90-22.1 form. This applies to any accounts of any type. This is filed separately from your tax return.
If the toatl foreign accounts never exceeds US$10K in a year, then you don't have to file that form in that year.
For 2004, you do need to file the form for all your accounts. You can file multiple accounts on one form. You will also need to file the same form in 2005, even if you sell off everthing today, since for some period in 2005 you had foreign accounts with more than US$10K.
(b) yearly election to defer the accrued income in your RRSP. This is done by a statement that followed IRS Rev. Proc 89-45 until 2002 when it was replaced by RP 2002-23and will be replaced by Form 8891 this year.
This has nothing to do with value. It has to do with electing to defer the income generated in your RRSP. This MUST be done every year, unless you elect never to defer, in which case you have to include the income (interest, dividends, cap gains) on your US tax return every year.
So, at a minimum, you have failed to report the RRSP deferral every year, and at worse, have decided not to defer and have not been including your taxable income on your US taxes. This must be corrected nefore you decide to collapse your RRSP, otherwise IRS will likely impose penalties and interest back to 2000 on your RRSP.
As to what you should do with your RRSP now, you might as well hold onto it, but why in a GIC? Why not invest in mutual funds or stocks? You can do this by moving your account to TD waterhouse in Canada.
Your other choice is to cash out, pay the 25% tax in Canada, use the 25% as a tax deduction on 1040, reporting the growth only since you arrived. You would need to fix your previous IRS returns (see above) before doing this.
<i>nelsona non grata</i>
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote"><i>Originally posted by orillia4</i>
Why are you suggesting moving your RRSP's to TD Waterhouse of Canada? Is there specific advantages with TD versus others?
Rich
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Yes. TDW has agreements in place with many US states (but not all afaik) so that you can manage your account if you live in one of these. A while back TDW was the *only* firm that had this as far as I know (it's possible that RBC now has some of this set up -- I believe we got a letter from them to this effect shortly before we moved to TDW). As far as I know, without these agreements its an SEC violation for a broker to sell Canadian mutual funds / stocks / other financial products to a non-Canadian resident.
After switching to TDW, I've been able to sell funds and purchase new ones for the first time in several years. Apparently, *some* fund companies won't do business with US residents (in spite of TDW's arrangement) but I've yet to come across one of those. There's a wide choice of options including probably thousands of mutual funds, individual stocks, bonds, MMFs, etc. -- I'm not aware of too many limitations.
Also, Nelson mentioned a few posts back that there is an annual fee of $100. As far as I know we were told there is no fee for our self-directed RSPs at TDW (another advantage over RBC which was charging $133/year for each of my own and my wife's accounts). This may depend on your balance though.
Note: we had a bit of trouble opening our accounts. TDW has recently become a lot more stringent when checking people's identities and they initially were insisting that we'd have to go to a branch office in Canada to show our id in person. However, in the end we were able to do this here in the Dallas area at a local (US) TDW branch office that I contacted. They took our information and faxed it to TDW Canada and gave TDW Canada their contact information so that our identity could be confirmed.
ETA
Why are you suggesting moving your RRSP's to TD Waterhouse of Canada? Is there specific advantages with TD versus others?
Rich
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
Yes. TDW has agreements in place with many US states (but not all afaik) so that you can manage your account if you live in one of these. A while back TDW was the *only* firm that had this as far as I know (it's possible that RBC now has some of this set up -- I believe we got a letter from them to this effect shortly before we moved to TDW). As far as I know, without these agreements its an SEC violation for a broker to sell Canadian mutual funds / stocks / other financial products to a non-Canadian resident.
After switching to TDW, I've been able to sell funds and purchase new ones for the first time in several years. Apparently, *some* fund companies won't do business with US residents (in spite of TDW's arrangement) but I've yet to come across one of those. There's a wide choice of options including probably thousands of mutual funds, individual stocks, bonds, MMFs, etc. -- I'm not aware of too many limitations.
Also, Nelson mentioned a few posts back that there is an annual fee of $100. As far as I know we were told there is no fee for our self-directed RSPs at TDW (another advantage over RBC which was charging $133/year for each of my own and my wife's accounts). This may depend on your balance though.
Note: we had a bit of trouble opening our accounts. TDW has recently become a lot more stringent when checking people's identities and they initially were insisting that we'd have to go to a branch office in Canada to show our id in person. However, in the end we were able to do this here in the Dallas area at a local (US) TDW branch office that I contacted. They took our information and faxed it to TDW Canada and gave TDW Canada their contact information so that our identity could be confirmed.
ETA
Any references I make to TDWaterhouse Canada are only because they are the ONLY Cdn brokerage house that will accept <b>NEW CLIENTS already living in the US </b> (47 or 48 states as of now).
If your existing broker (the one you had when you moved) is willing to trade in your existing account, this is fine.
It's just that if he is not, TDW is the only alternative.
<i>nelsona non grata</i>
If your existing broker (the one you had when you moved) is willing to trade in your existing account, this is fine.
It's just that if he is not, TDW is the only alternative.
<i>nelsona non grata</i>