Your explanation is incorrect. RRSP deductions go BEFORE line 435. so, if she uses a deduction, then this reduces line 435.
So again, an RRSP contribution was not wise in her situation, since she gets no deduction for it. She will end up paying Cdn tax on money that she got no decuction for. Has you soughtadvidce earlier, you would have been told that. Nesides, sicne sje was low income in canada, an RRSP contributrion was not a good idea in general.
RRSP contribution and f1116
Moderator: Mark T Serbinski CA CPA
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Your explanation is incorrect. RRSP deductions go BEFORE line 435. so, if she uses a deduction, then this reduces line 435.
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That's exactly what I said in my previous post :)
She can contribute to her RRSP even abroad if she does not go over the contribution limit allowed. She contributed all the year without reaching this limit. I can claim a RRSP deduction an amount inferior to the amount she contributed over the year (deduction limit).
Your explanation is incorrect. RRSP deductions go BEFORE line 435. so, if she uses a deduction, then this reduces line 435.
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That's exactly what I said in my previous post :)
She can contribute to her RRSP even abroad if she does not go over the contribution limit allowed. She contributed all the year without reaching this limit. I can claim a RRSP deduction an amount inferior to the amount she contributed over the year (deduction limit).
No, you said it reduces line 483, implying that it did not reduce 435. Since 483 is meaningless in the context of foreign tax credits, toi refer to it in any way was incorrect.
Now, to your "unwise" decision to fund her RRSP:
Contributing to an RRSp when one will not get an immediate dedcution, or even a near future deduction is not the ideal planning situation. The RRSP willstill be fully taxable in Candada, and the gains from that contribution will still be fully taxable in US.
Many people read these threads, The response is not just for you but for everyone. So, to make it clear to you and other reading:
It is not wise to make any RRSP contributions once you have become a US tax resident, or chosen to become a US tax resident, whether or not you are allowed to. Since the RRSP contribution is not deductible in US, and your Cdn income is reportable, any Cdn benefit from the RRSP contribution merely makes you owe more tax to US, and creates future taxable income without the benefit of a tax deduction.
Now, to your "unwise" decision to fund her RRSP:
Contributing to an RRSp when one will not get an immediate dedcution, or even a near future deduction is not the ideal planning situation. The RRSP willstill be fully taxable in Candada, and the gains from that contribution will still be fully taxable in US.
Many people read these threads, The response is not just for you but for everyone. So, to make it clear to you and other reading:
It is not wise to make any RRSP contributions once you have become a US tax resident, or chosen to become a US tax resident, whether or not you are allowed to. Since the RRSP contribution is not deductible in US, and your Cdn income is reportable, any Cdn benefit from the RRSP contribution merely makes you owe more tax to US, and creates future taxable income without the benefit of a tax deduction.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
I didn't say the amount on line 435 was not reduced : "
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When using the RRSP deduction it is equivalent to reduce the amount shown on line 435 to have line 483 equals to 0.
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So because the amount on 435 was reduced and because 437 is a constant, line 483 is reduced. I just computed the correct amount of RRSP deduction to claim to have a tax reduction (in line 435) that allows me to have 483 equals to 0.
From what I know and I may be wrong a RRSP is only taxable when you withdraw from it or/and when you have some investments inside. My wife doesn't have any that is probably the detail that is different from what you said. You can also use form 8891 to defer taxes. I don't really know how it works though.
[quote]
When using the RRSP deduction it is equivalent to reduce the amount shown on line 435 to have line 483 equals to 0.
[/quote]
So because the amount on 435 was reduced and because 437 is a constant, line 483 is reduced. I just computed the correct amount of RRSP deduction to claim to have a tax reduction (in line 435) that allows me to have 483 equals to 0.
From what I know and I may be wrong a RRSP is only taxable when you withdraw from it or/and when you have some investments inside. My wife doesn't have any that is probably the detail that is different from what you said. You can also use form 8891 to defer taxes. I don't really know how it works though.
Whatever. You brought up line 483, which means nothing in this contest.
"I don't really know how it works though."
Yup. That is why it is best to leiten to the answers than pick at wording.
My hope is that your mistake -- which is not an unusual for the uninitiated -- will help others.
"I don't really know how it works though."
Yup. That is why it is best to leiten to the answers than pick at wording.
My hope is that your mistake -- which is not an unusual for the uninitiated -- will help others.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
In fact on the T1 I have there is no line numbered 483. I was referring to the line called " This is your refund or balance owing". It s located between line 482 and 484 and 485. So I assumed it was line 483. I hope for you it was the same.
Sorry I still don't see the mistake I made. Can you clarify ?
Sorry I still don't see the mistake I made. Can you clarify ?
Whaa. :shock: Sorry I didn't mean to offend you. I understood what you said about the RRSP but I think in my case it still beneficial to deduct the RRSP to avoid paying something for Canada even if that means I ll pay more tax in US.
So that s why I don't think I made a mistake according to what you said in my tax returns.
Anyway I just thought you understand what I tried to say. Sorry again.
So that s why I don't think I made a mistake according to what you said in my tax returns.
Anyway I just thought you understand what I tried to say. Sorry again.
From my experience, that would not be a correct conclusion.
In fact, now that you have made this step, it would be best to simply take as much of a deduction that you can in Canada, as it is unlikley that much of your Cdn tax that you are paying (line 435) will be usable in US.
In fact, now that you have made this step, it would be best to simply take as much of a deduction that you can in Canada, as it is unlikley that much of your Cdn tax that you are paying (line 435) will be usable in US.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Yep I can do that too to get a refund from Canada. But with the same logic explained before that will decrease the foreign tax credit in the US by the same amount of the refund. It's equivalent except that I will have few more bucks of penalty on US side.
For now I prefer not to maximize the RRSP deduction in order to benefit from what is left the day we will go back to Canada. I don't plan to stay in the US here for a long time anyway.
My wife has a RRSP regular saving with a very low interest rate (less than 1%). So the gains I will have to report in the future will be very low.
Glad you replied otherwise.
For now I prefer not to maximize the RRSP deduction in order to benefit from what is left the day we will go back to Canada. I don't plan to stay in the US here for a long time anyway.
My wife has a RRSP regular saving with a very low interest rate (less than 1%). So the gains I will have to report in the future will be very low.
Glad you replied otherwise.
Oh well. makes no sense. Your RRSP deduction is worth more in Canada than US, and you will want to collapse RRSP before returning to Canada.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Hi nelsona,
I am about to send my US return but I still have some doubts about something. My wife is considered as US resident since March 19 2012 as you know and I was wondering if I have to remove the amount of money she got before that date. Let say she got 18000 $ in Maternity leave in 2012 from January1th to September 31th (274 days). Should I remove the part of money before March 19th and consider only 12876 $?
Also for the foreign tax credit should I consider only the portion of tax she will pay in Canada after March 20th.
She also got the UCCB until March 19th. Using the same reasoning it seems I don't have to include it.
Is the same logic apply for the interest she has to report for her TFSA and RESP.
Thanks again.
I am about to send my US return but I still have some doubts about something. My wife is considered as US resident since March 19 2012 as you know and I was wondering if I have to remove the amount of money she got before that date. Let say she got 18000 $ in Maternity leave in 2012 from January1th to September 31th (274 days). Should I remove the part of money before March 19th and consider only 12876 $?
Also for the foreign tax credit should I consider only the portion of tax she will pay in Canada after March 20th.
She also got the UCCB until March 19th. Using the same reasoning it seems I don't have to include it.
Is the same logic apply for the interest she has to report for her TFSA and RESP.
Thanks again.
All income for 2012 must be reported. That is the rule for joint return.
If you don't want to report it, you must each file separately, and your taxes woill go up dramatically.
If you don't want to report it, you must each file separately, and your taxes woill go up dramatically.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best