8891 Contribution Amount

[cammy7]

I've been reviewing the threads on 8891 and haven't seen any guidance on how to handle the initial contribution amount. Perhaps somebody out there can help.

Is there a maximum limit as to what the contribution amount is. for instance on a 401 it is 18k or 100% of gross income whatever is least. Is there one for what can put down on line 9 on form 8891 for an RRSP?

For RRSP's the benficiary could have more than this contributed - examples are catching up on earlier years when a contribution was not made or if a spouse makes a contribution on behalf of the other one.

So what happens if you have made a $50k contribution in 1 year. Do you put down the US equivalent on form 8891 or are you limited to US$18k? If you are limited what do you do with the excess? Canada permtted you $50k, but USAonly $18k?

Would appreciate some guidance on how to address such a dilemma?

[Carson]

I've been reviewing the threads on 8891 and haven't seen any guidance on how to handle the initial contribution amount. Perhaps somebody out there can help.

Is there a maximum limit as to what the contribution amount is. for instance on a 401 it is 18k or 100% of gross income whatever is least. Is there one for what can put down on line 9 on form 8891 for an RRSP?

For RRSP's the benficiary could have more than this contributed - examples are catching up on earlier years when a contribution was not made or if a spouse makes a contribution on behalf of the other one.

So what happens if you have made a $50k contribution in 1 year. Do you put down the US equivalent on form 8891 or are you limited to US$18k? If you are limited what do you do with the excess? Canada permtted you $50k, but USAonly $18k?

Would appreciate some guidance on how to address such a dilemma?

It's Friday afternon, I'm tired and probably a little punchy, but why would you put down anything other than the actual contribution amount after conversion to US $?

The US does not "limit" anything to do with an RRSP, as it is a Canadian plan. The F8891 is an information return to report to the IRS what has occurred within your Canadian RRSP account. Simple as that.

Just use the actual contribution.

[cammy7]

Thanks Carson. To take advantage of the deferral of RRSP income under Article XVIII(7) and to disclose the contribution amount, should I file both form 8891 and form 8833. Or is only the former required?

Regards...

[nelsona]

Only 8891 satisfies both the treaty requirement and the trust reporting requirement.

[cammy7]

/Great advice thanks....I'm glad I came across your posts. You wouldn't believe the bad advice I've been getting - from professionals no less.

I'm becoming much clearer on form 8891 with your help. Hopefully this is my last question...when I look at the form the lines are clear except for lines 10a through e. While I will have amounts for these lines, I thought the intent of the form was to defer income until the RRSP's are collapsed. By transferring interest income to F1040 line 8a, and dividend income to F1040 line 9a etc aren't I bringing these amounts into income for the current year thereby increasing the Adjusted Gross Income line 22 on 1040?. Or is there another line on 1040 that negates what I have entered on 8a and 9a, reason being they were not distributed and under the treaty I am deferring the income. Should I put a minus amount on 1040 line 21 or something like that??

[nelsona]

You aren't reading the form and following its directions correctly.

if you are deferring income, you will reach a 'stop here' command before entering anything on line 10.

[nelsona]

... and when you do that, you will note that you don't even need to enter the ammount contributed each year, just the year-end value.

[cammy7]

You're absolutely right. There it is plain as day lines 8 and 9. I need new glasses or something.....unbelievable I should read the form instead of being intimidated by it.....