RRSP

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
flames9
Posts: 50
Joined: Fri Apr 08, 2005 9:00 am

RRSP

Post by flames9 »

I'm a bit confused dealing with my RRSP. I submitted form 8891 last yr for the first time. checked box 6a NO, and checked the box in 6C. And put in my amount in line 8.

This yr, I assume for line 6A, I have to check YES. Line 6b will be 2004, Line 7a will be ZERO, as I have not received any $$ from my RRSP's, and line 8 will have the $$$ that was in the acct at the end of Dec 2005. IS that correct? Many Thanks, Scott
flames9
Posts: 50
Joined: Fri Apr 08, 2005 9:00 am

Post by flames9 »

Sorry, this was to be in the 8891 forum!!, Wish we had a delete feature, Very sorry
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Scott, you still didn't clarify what type of income this severance was.

You need to add severance to your income for 2005.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
flames9
Posts: 50
Joined: Fri Apr 08, 2005 9:00 am

Post by flames9 »

I did add the severence to my income and reported that on my 1040. I rolled all my severence pay from the Forces to my RRSP (except for the holiday pay, which they paid me out as just normal income reported on a T4A slip) I do belive Canada did not take any taxes off of that severence because it was rolled directly from my Armed Forces account, directly to a RRSP account. maybe I'm getting terms mixed up!! What I do know is that my RRSP account last yr had approx 15000 in it, and reported that on form 8891. This year, thanks to the $$$ from the armed forces, I have 40000 in my rrsp account. Maybe I should have plunked over the $$$ and got Serbinski to do my taxes this yr!! ACTUALLY not sure if this matters, but was not actually severence pay that was converted into RRSP, but it was what is called Return of Contributions. The $$ that I and the governemnt put into my retirement fund. That money went directly untaxed into my RRSP account!! Does that make more sense? Sorry for all the babble
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

See, return of contributions is not severance, it is pension. That is why it was permitted to go directly into your RRSP.

In my opinion this portion should not be taxable in US (right now), but only when you withdraw it. I would NOT include this on your Cdn return. This is covered by a treaty clause. This should drastiaclly reduce your 2005 US tax.

However, on the other hand, that portion of RRSP money will eventaully come out taxed in US (only the book value you had when you arrived in uS will be tax-free).

That still doesn't answer how you were able to collect EI, but I guess they only took the holiday pay into account when determining your eligible weeks.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
flames9
Posts: 50
Joined: Fri Apr 08, 2005 9:00 am

Post by flames9 »

Sorry for the confusion, how a few different words make a world of difference. Truly appreciate your assistance.
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

... just to correct. I said earlier it should not be on your Cdn return. Obviously it isn't 9in the sense that it has a corresponding RRSP contribution.

What I meant to say is thatit should not appear on your US return , as it is pension income that was not taxed in canada, it cannot be taxed in US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
flames9
Posts: 50
Joined: Fri Apr 08, 2005 9:00 am

Post by flames9 »

Thanks Nelson. Appreciate everything.
MaggieA
Posts: 150
Joined: Sun Oct 31, 2004 4:06 pm

Post by MaggieA »

There is a special provision allowing severance to be rolled directly into an RRSP. See e.g. http://www.davis.ca/publications/2003-1 ... yments.pdf
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Maggie, I'm familiar with this provision, however, since it hasn't been allowed for service after I believe 1996, and that flames said it wasn't really severance, this is moot.

It certainly would not account for the $30,000 or so that was added to his RRSP, and there still would not be any US tax relief, thus I did not feel the need to bring up this feature.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

... but good to hear from you, haven't seen you post here or grasmick for a few months now. :P
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Post Reply