Departure Return RRSP and 8891

Greg · Post by **Greg** » Wed Dec 31, 2008 1:32 pm

Thanks again. Since I'm now living in the US and don't have foreign address can I use E-FILE and send my return in to the IRS and then send amendment (1040X) and attach my final 8891?.

Since I have closed my RRSP account this will be the last 8891 I will need to send in, I have always done this by mail attached to my 1040. Iâ€™m wondering if it would be better just to stick with the snail mail on more year or does it matter.

nelsona · Post by **nelsona** » Wed Dec 31, 2008 1:34 pm

I ALWAYS e-file and then send in the 8891.

Note that if your use turbotax, 8891 is an included form which gets e-filed.

Greg · Post by **Greg** » Wed Dec 31, 2008 1:40 pm

Cool.. I didn't know Turbo tax had the 8891. I have always used Taxcut but I think I will switch over to Turbo Tax.

Greg · Post by **Greg** » Tue Jan 27, 2009 9:36 am

I have searched high and low for my wifeâ€™s and myself June or May pay stubs so that I can calculate the amount of income to report to CRA, and the amount of FICA to take as a tax credit. If Iâ€™m not able to find them and our employers cannot provide a copy would it be acceptable to Prorate Income and FICA amounts based on our W2â€™s.

Since CRA Prorates our Non-Refundable tax credits based on the date we left Canada, Iâ€™m assuming it would be acceptable, but just wanted to check.

Thank You again, for any responses.

nelsona · Post by **nelsona** » Tue Jan 27, 2009 9:54 am

Obviously, absent of hard data, you wil have to make an assumption. It has nothing to do with the proration of your credits, however, since if you made $100,000 before coming to canada and nothing after, your credits would still be prorated, but you wages would not.

Greg · Post by **Greg** » Tue Jan 27, 2009 10:27 am

Nelsona â€“ Iâ€™m still actively looking for the pay stubs hopefully they will show up. If I do find them would I still need my W2 attached to my T1. I was planning on sending in Paystub and W2. Along with 1040 along with explanation of Income reported.

nelsona · Post by **nelsona** » Tue Jan 27, 2009 10:55 am

You need to send W-2 and 1040. You can attach a note expalining the breakdown.

Greg · Post by **Greg** » Wed Feb 25, 2009 10:13 am

Another follow up question

I have completed our 1040 and E-filed our return to the IRS. I have also finally found our last pay stubs from work when we moved over to the US, so I now have the Income bases to report to CRA.

From the pay Stubs I can easily get our income to report to CRA along with our tax credits from FICA however Iâ€™m having a hard time figuring out the amount of our Fed/State tax credit to take since I obviously canâ€™t use the number on our paystubs, because this is the amount paid to date and not actually owed. I can get this number by prorating our final Fed/State tax return but I don't think it will be entirly right.

If I prorate the amount from our final Fed/State tax bill this would not be entirely accurate tax credit to take in Canada, because of extra Income made after we moved from Canada and Credits that we qualified for after moving from Canada on our Fed/State.

I guess my question is how do I fairly report our Fed/State tax credits for the 157 days that we where residence of Canada to CRA, when our final Fed/State tax bills includes taxes/Credits after we moved from Canada.

Again thanks for all your help.

nelsona · Post by **nelsona** » Wed Feb 25, 2009 10:22 am

Fed and state tax credits are calculated quite simply: The overal fed/state tax you paid in the year as a percentage of that income you report in canada.

So if your 1040 had $100,000 of AGI income, and you reported $10,000 on your Cdn return, 1/10th of the final tax is creditable. It doesn't matter when in the year rate you earned the income . Foreign tax crdits always work on the effective tax rate, not the marginal.

Of couse, you should not have sent in your US tax without having completed your Cdn one. How did you know what credit/deduction you needed to take for Cdn taxes on your 1040?

Greg · Post by **Greg** » Wed Feb 25, 2009 11:11 am

Again..... thanks to you Nelson , I understand know how to calculate the Fed/State amount now.

We had 100% US source income. Other than my small amount of RRSP cash out reported on 8891. It was such a small marginal amount that it would not have made that much of a difference on my final 1040 tax bill, Granted there would have been some savings but not much. Your right I should have waited and taken the credit but I didn't I'm not going to freat over a few bucks here and there.

Thanks Again for all your help, you have been a life savor for me many times on figuring out this Cross-Border stuff over the past several years.

nelsona · Post by **nelsona** » Wed Feb 25, 2009 11:19 am

I'm always willing to help people who tackle their taxes nice and early in the tax season.

I lose patience, a little, with those who come here April 12th, or worse, try to argue with me over things they knew were wrong 4 years ago...