Tax on RRSP contribution

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XR7777
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Joined: Sat Oct 13, 2018 6:39 pm

Tax on RRSP contribution

Post by XR7777 »

Hello,
I received severance pay after I left Canada for my new job in the U.S. As an agreement with my previous employer, I put all the payment into RRSP so I was not taxed on this income in Canada. I will be taxed by IRS for this Canadian income, right?

Thanks!
nelsona
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Re: Tax on RRSP contribution

Post by nelsona »

This is considered pension income that was not taxed in Canada, so is not taxed in US either. It will be fully taxable in US only when you withdraw it, like in Canada.
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nelsona
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Re: Tax on RRSP contribution

Post by nelsona »

From a technical point of view, it is wages that were contributed to a pension, which is an allowable deduction from wage. You may wish to include a form 8833 explaining this, but not required.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
XR7777
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Joined: Sat Oct 13, 2018 6:39 pm

Re: Tax on RRSP contribution

Post by XR7777 »

Thank you nelsona again for your help. I will include form 8833 to explain.
Bubba Gums
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Re: Tax on RRSP contribution

Post by Bubba Gums »

It was my understanding that an an RRSP contribution is never deductible from US income taxes if the RRSP is an individual plan. XVIII (15) Is this wrong?
nelsona
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Re: Tax on RRSP contribution

Post by nelsona »

What you say is true.

I guess my earlier comment " From a technical point of view, it is wages that were contributed to a pension, which is an allowable deduction from wage. You may wish to include a form 8833 explaining this, but not required." was misleading. That is the mechanics for reporting the income in Canada. It would not be considered an ordinary RRSP contribution in any event.

The severance is really pension income by IRS, and by rolling into an RRSP, it is not taxable in Canada, and thus not in US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
XR7777
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Joined: Sat Oct 13, 2018 6:39 pm

Re: Tax on RRSP contribution

Post by XR7777 »

"The severance is really pension income by IRS, and by rolling into an RRSP, it is not taxable in Canada, and thus not in US."

I signed an agreement with my previous Canadian employer to put this severance payment to RRSP. Will it work to submit this agreement to IRS?
nelsona
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Re: Tax on RRSP contribution

Post by nelsona »

Yes, it has nothing to do wit the agreement, it has to do wit the type of income and how it will be taxed in Canada (and this US).
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
XR7777
Posts: 14
Joined: Sat Oct 13, 2018 6:39 pm

Re: Tax on RRSP contribution

Post by XR7777 »

I will explain and see if IRS recognize it. Thanks!
XR7777
Posts: 14
Joined: Sat Oct 13, 2018 6:39 pm

Re: Tax on RRSP contribution

Post by XR7777 »

nelsona wrote:
> Yes, it has nothing to do wit the agreement, it has to do wit the type of
> income and how it will be taxed in Canada (and this US).

Should I report severance income on form 1040 or exclude it from 1040 then explain it on form 8833?
nelsona
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Re: Tax on RRSP contribution

Post by nelsona »

You report the gross pension on the pension line, and the taxable on the same line, presumambly zero, you can certainly include an 8833 to explain,
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
XR7777
Posts: 14
Joined: Sat Oct 13, 2018 6:39 pm

Re: Tax on RRSP contribution

Post by XR7777 »

Thanks so much for your help!
XR7777
Posts: 14
Joined: Sat Oct 13, 2018 6:39 pm

Re: Tax on RRSP contribution

Post by XR7777 »

nelsona wrote:
> You report the gross pension on the pension line, and the taxable on the
> same line, presumambly zero, you can certainly include an 8833 to explain,

nelsona,
I am using H&R block. I could't find the pension line. Did you mean box 12? then which code? Or it is in deduction or credit section?
XR7777
Posts: 14
Joined: Sat Oct 13, 2018 6:39 pm

Re: Tax on RRSP contribution

Post by XR7777 »

or put gross pension on 4a and taxable amount on 4b after converting Canadian $ to US $?
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