I am a US citizen married to a Canadian, living in Canada since 2001. I have filed a 1040 (married filing jointly) since that time. I began contributing to an RRSP in 2002, and to an RESP in 2003, when my son was born. I just discovered, much to my horror, that I was supposed to have declared RRSP and RESP distributions. The amounts were very small, and will not affect my US tax burden, however I understand that I have to report accurately. I am now in the process of filing amended 1040s and all other necessary forms for the past three years.
Regarding the reporting of my RESP information, I understand that I must complete 3520 and 3520A, as well as 709, since my contribution to the RESP is considered a gift. I was shocked to see forms 3520 and 3520A. I think you have to be a tax lawyer or accountant to complete them. I have spent hours trying to figure out how to report the information requested. It is a nightmare. I am worried that I am out of my league and may need a professional to complete it. Needless to say, it pains me to have to pay several hundred dollars, likely more, to have these forms completed, plus to get hit with double tax. Obviously, I should have never opened an RESP, since I will likely not realize any real tax benefit. Live and learn. In any case, I thought I would pose some questions to see if I could possibly complete the paperwork myself.
Regarding the RESP, my wife and I are joint subscribers to Canadian Scholarship Trust (CST) Plan for our son. We contribute a lump sum of $2,000 (the max to get the Canadian govt grant) per year. I get a statement every year that tells me how much I contributed to the plan over the past year, the amount of the Canadian Education Savings Grant contribution for the year, income earned on the plan over the past year, income earned on the grant, and money that was transferred/withdrawn from the plan during the year. I am locked in to pay into the plan for the next 14 years.
Regarding the 3520A: How in the world does one complete this form? They require all kinds of financial information about the trust (in this case, CST), including all the US citizens that are members of the plan! This is nuts! How on earth do I complete this?
Regarding the 3520, Schedule A asks me to report the yield to maturity and FMV of the obligation. Is this only on the amount I contributed that year (i.e., $2,000) or is this the total amount of the plan to date? And how do I calculate the FMV anyway? Since I am locked in, the plan has almost no value until it matures in 2020. Are they asking what the value would be if I cashed it in today? Or what the value is as of end of the year, assuming I don't touch it until maturity? Or are they asking what the value would be at maturity? In that case, would it be the same as the yield to maturity? Help!
On Schedule B they ask what the FMV is of "property received" from my transfer. I have no idea how to report this.
Also, last year (2005 tax year) my in-laws paid the annual $2,000 contribution to the plan. Do I still need to file a 3520 and 3520A for 2005, since I personally did not make any contributions to the plan that year. Or is the fact that a contribution was made, regardless of who actually cut the cheque, mean that I have to file?
Am I in over my head here?
Help Reporting RESPs on 3520 and 3520A
Moderator: Mark T Serbinski CA CPA
Your on your own..on RESPs and form 3520 (you need to do it).. 
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RRSPs are covered by form 8891 and I've answered all there is to know about that in other threads.
Your post was about as long as the 3520 form.
. RRSPs are covered by form 8891 and I've answered all there is to know about that in other threads.
Your post was about as long as the 3520 form.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Just to elaborate slightly on Nelson's advice, the Canadian grandparents can open an RESP for your child. Since they're actually funding the contributions, this is the obvious strategy.
Once the grandparents have opened their RESP, you can simply transfer the existing RESP into the new one (because your child is the beneficiary of both plans), then close out the original RESP.
This way, your in-laws can keep on funding the RESP for their grandchild, and you have nothing to do with it and therefore no IRS reporting obligation.
Once the grandparents have opened their RESP, you can simply transfer the existing RESP into the new one (because your child is the beneficiary of both plans), then close out the original RESP.
This way, your in-laws can keep on funding the RESP for their grandchild, and you have nothing to do with it and therefore no IRS reporting obligation.
Unfortunately, I don't think I can do that. I stupidly purchased an RESP through Canadian Scholarship Trust (don't ask -- it just seemed like a good idea at the time) and am locked into it. I have asked if I can transfer it and was told that I could not without taking a huge penalty hit.
BTW, I bit the bullet and had an accountant complete the 3520 and 3520A for me, which I can now use as a model for completing it myself in future years.
BTW, I bit the bullet and had an accountant complete the 3520 and 3520A for me, which I can now use as a model for completing it myself in future years.
Would IRS likely penaltize on filing 3520/3520A late?
dmendel wrote:Unfortunately, I don't think I can do that. I stupidly purchased an RESP through Canadian Scholarship Trust (don't ask -- it just seemed like a good idea at the time) and am locked into it. I have asked if I can transfer it and was told that I could not without taking a huge penalty hit.
BTW, I bit the bullet and had an accountant complete the 3520 and 3520A for me, which I can now use as a model for completing it myself in future years.