Reporting US Retirement contributions to CRA

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agrisiva
Posts: 56
Joined: Sun Mar 18, 2012 1:27 pm
Location: Vancouver, BC

Reporting US Retirement contributions to CRA

Post by agrisiva »

Hi,
I live in Canada and work for a US public university. My retirement contribution amount is not reported anywhere on my W-2 form (as it is a mandatory contribution in lieu of Social security). Should I still add that amount (from my December paystub) with my W2-Box-1 for calculating the total amount to be reported on Line 104 of CRA tax form.
Thanks,
Agrisiva.
nelsona
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Post by nelsona »

To determine if it should be included in income, see
http://www.fin.gc.ca/treaties-conventio ... xb-eng.asp

and form RC268

If it must be included in income on 104, it should also be deductible on line 207 subject to RRSP limits (and should impact your subsequent year's RRSP limit).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
agrisiva
Posts: 56
Joined: Sun Mar 18, 2012 1:27 pm
Location: Vancouver, BC

Post by agrisiva »

Thanks Nelsona as always for your quick reply. So, here is the story behind my question.

I have been honestly (stupidly) reporting it and gladly deducting the whole amount for the past 5 years. Every time, I will get a processing review and I send my December paystub and they accept it. But, this year the Winnipeg office kept quiet for 5 months and in December they simply rejected it as it is not shown in my W-2 and immediately slapped me with a Reassessment notice. I uploaded the documents again with a letter from the TIAA-CREF vendor as a proof for my contribution. No response yet from Winnipeg, but CRA sent me an Amount Owing letter threating me to pay $1700 or face daily compounding interests.

What is the best option for me? Should I just pay the full amount (before they send it to collections) and wait for their response or submit a formal objection letter to dispute the amount? Any thoughts?
nelsona
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Post by nelsona »

When you say "reporting it and gladly deducting" those amounts, what do you mean? have you been using the RC form? have you been making extra RRSP contribtions, perhaps putting you over the limit?

AS I said, if they deny the deduction of 207, then they should also not require you to include the income on line 104.

What IRC code does your pension fall under?
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Post by nelsona »

If your pension meets the definitions in the treaty document I cited, then I would not pay it; I would submit a formal objection, until the issue is fully resolved.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
agrisiva
Posts: 56
Joined: Sun Mar 18, 2012 1:27 pm
Location: Vancouver, BC

Post by agrisiva »

Thanks Nelsona,

Yes, its an eligible retirement account - DCP - 401(a) account. Yes, I was reporting it and deducting it using my RRSP room and sincerely filing RC268 form wherein I specify my Employer contribution as well. I do not have any RRSP account in Canada at all, so I deduct my US contributions against my room, but room never gets filled so it keeps growing.

CRA reviewers agreed with my calculations from 2011 to 2013. Its just 2014, my file went to an officer who didn't care to read my letter and decided not to look at my December pay stub. Instead the officer thought I used an amount in Column 12b code DD on my W-2 slip as a retirement contribution. This amount is the Cost of employerâ€￾sponsored health coverage which is neither taxable nor taxâ€￾deductible. So, I neither included this amount in Line 104 nor Line 207 of my tax return.

So, thx for your opinion Nelsona, I will file my formal objection and fight it. I am 100% sure, it is eligible, but just scared they will go to Collections and ruin my credit history.
frank1867
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Joined: Wed Feb 10, 2016 1:56 pm

Post by frank1867 »

This is great information guys. I have a very similar situation where I just started contributing to a 403(b) plan, which also qualifies as per the link Nelsona provided. My employer did not include my contributions anywhere on my W2, but I know I paid into it and can see the amount for the year on my December year end pay stub.

Is this normal that my contributions do not show up on the W2? I've read that employer contributions never show up and you always have to look at your pay stub to include their amount on the RC268 for the pension adjustment calculation, but I just assumed that my own contributions should show up on the W2; perhaps in box 12 e?

My uncle is also a commuter and he said his 401(k) contributions always show up in box 12 on his W2. Anyone know if my employer made a mistake preparing my W2, or will these contributions never show up?
agrisiva
Posts: 56
Joined: Sun Mar 18, 2012 1:27 pm
Location: Vancouver, BC

Post by agrisiva »

My state university does not report Defined Contribution Plan - 401(a) retirement account anywhere on W-2 as it is a mandatory account in lieu of social security. But it does report 403(b) on my W-2 - box 12c-Code E. My question to the experts is that - if it is not reported, can we just avoid reporting it. Why bother with it, when CRA doesn't want to acknowledge anything but W-2 forms. I am being harassed by CRA past 3 months for being very honest. Any thoughts?
nelsona
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Post by nelsona »

Line 104 requires you to report your contribution as income whether or not it is listed on your W-2. Not reporting it would be underreporting your income.

So, in my opinion, you can't simply ignore it.

You do have the choice to not take the deduction, I suppose, making that contribution taxable now, and non-taxable later when you take it, but I don't suggest that.

You just got a bad file processor.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
agrisiva
Posts: 56
Joined: Sun Mar 18, 2012 1:27 pm
Location: Vancouver, BC

Post by agrisiva »

Thanks Nelsona for your reply as always. You are awesome. I am copying my dispute text below for comments or as an FYI, if someone else in my position...
agrisiva
Posts: 56
Joined: Sun Mar 18, 2012 1:27 pm
Location: Vancouver, BC

My Dispute Letter

Post by agrisiva »

Hello Chief of Appeals,

After immigrating to Canada in 2010, I continue to work for a state university in the US. I always declare all my income sincerely to CRA and pay full applicable taxes.

For the tax year 2014, a Processing Review (Reference Number - TB1518 8044 XXXX) was conducted on my file as they do every year, (I guess, because of my foreign income). I was asked to show some proof for my retirement contributions in the US. Just like what I did the year before, I submitted my December pay stub and W-2 as the proof.

I have two retirement contributions such as 401(a) and 403(b). CRA accepted my declared amount for 403(b) as it clearly shows up on my W-2, but rejected 401(a) as it is not shown in W-2. The fact is that, my 401(a) account is a retirement contribution that is not reported on the W-2 since it is a mandatory deduction in lieu of Social Security. That is the reason, I included the December pay stub and highlighted the amount shown for both the retirement accounts. CRA simply ignored my note and rejected my deduction. They incorrectly concluded that I used an amount in Column 12b code DD on my W-2 slip as a retirement contribution.

Truth is that, I did not use that amount in Column 12b code DD on my W-2 slip. I am already aware that it is the Cost of employerâ€￾sponsored health coverage which is neither taxable nor taxâ€￾deductible. So, I neither included this amount in Line 104 nor Line 207 of my tax return.

I have explained this in my 2nd response letter submitted online on January 4, 2016 (New Reference Number - TB1600 4132 XXXX). I have also included a confirmation letter from TIAA-CREF, the vendor for my 401(a) account, as a proof for my annual contribution.

I have received no response from CRA yet, instead I was sent a letter on February 20, 2016 reminding me of the total amount owing. As a result, I have no other option but to formally submit my objection and request your help to solve this issue.

If you need additional clarification, please call me at (403)...

Thank You,
Sincerely,
AGRISIVA
nelsona
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Post by nelsona »

Make sure you submit, if you haven't done so already and explicit itemization of how you cam up with both line 104 and line 207, since that is what you/they are contesting.

Also include the technical explanation definition for eligible US pensions I cited.

And attach the back of a W-2 with DD definition clearly shown.

I would skip the line about being sincere and paying your taxes. Meaningless.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
frank1867
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Joined: Wed Feb 10, 2016 1:56 pm

Post by frank1867 »

Wow, thanks so much to both of you. This is a relief, I wasn't sure how I was going to handle this; but now it's very clear.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

and agrisiva, I wouldn't call your treatment by CRA 'harassment'. Their is a misunderstanding on the part of the agent, which should be easily fixed. Int'l takes a long time to process returns (as you already knew from past years).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
agrisiva
Posts: 56
Joined: Sun Mar 18, 2012 1:27 pm
Location: Vancouver, BC

Post by agrisiva »

thanks Nelsona for your replies. I agree with you. But, nonetheless CRA caused an unnecessary homework and headache for me for the past 3 months because of their carelessness. Not sure how long it is going to take to solve this matter.
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