RESP Question for Non USC Parent/USC Child

[IRWCA]

I'm a non USC, resident in Canada. I have a USC daughter also resident in Canada and who is going to university here. I have been contributing to an RESP, with my daughter being the beneficiary.

As I'm not a USC, I do not file a US tax return.

We withdrew some funds from the RESP in 2017 for my daughter's education. How do we enter this on her US return?

Note - I have read several posts where both parent and child are USCs in Canada asking for filing advice, but none where just the child is a USC. If there is a previous thread on this subject, apologies for the duplication and please point me to it.

Thank you.

[nelsona]

The RESP is not income to the child, for US tax purposes, it is however either (a) a distribution from a foreign trust (if you consider the RESP to be a trust) or (b) it is a gift from you to her. Neither of these options are considered income to the child.

if (a): the child would file a 3520 reporting that she received a distribution from a foreign trust. No income to report on 1040.

If (b): she reports nothing, unless the gift is greater than $100K in that year, which is unlikely. No income to report on 1040.

[IRWCA]

Thanks for you reply, most helpful.

A follow up question - my daughter is, I believe, a dependent while attending secondary education full time. However as neither of her parents are USCs (hence not filing returns), would my daughter check the box on her 1040 that no one can claim her as a dependent?

[nelsona]

Unless she is disqualified from being considered your dependent, then she cannot claim the exemption (for 2017 -- exemptions are going away in 2018). The fact that you did not claim her in 2017 doesn't change this.

We will have to see what the rules are in 2018.