8891 Never Filed

denisharlock · Post by **denisharlock** » Sat Feb 03, 2007 10:54 pm

I moved the US in '96. For the '96 to '02 Tax Returns, I included a letter stating that I wished to file an election under Article XXIX(5) - understanding that this would make Uncle Sam aware of my RRSP - and thanks for leaving it alone!
I have now found out about 8891 (first available in '03)
What should I do now to satisfy the '03 to present requirements?
Thanx, Denis

Sun Feb 04, 2007 7:53 am

You should likely make sure that your RRSP disclosures and elections are good for the past six years. This means filing an election under Rev Proc 2002-23 or Rev. Proc 89-45 for years prior to 2003, and form 8891 for 2003 onward.

The revised elections or form 8891 should be sent to your regular IRS processing center with a covering letter explaining what you are doing.

hungarianpride · Post by **hungarianpride** » Sun Feb 04, 2007 6:34 pm

Awhile back, in a post started by jstone, nelson suggested that he could just amend his previous year's 1040 (2004) with a form 8891, rather than go back all the way to 2002. Is your advice based on new info?

Leslie · Post by **Leslie** » Sun Feb 04, 2007 8:35 pm

My husband is in a similar situation. He's been here since October of 1994 and has always filed Form TD F 90-22.1 (on advice of his immigration lawyer) in reference to his RRSP but has never made an election on his RRSP as he didn't know anything about it. In his case since he's never made an election or had a distribution, how far back does he have to go to fix this situation? I saw in the original post that you mentioned six years. Why only six?

Does the US government ever really pursue any of these cases of people with RRSP that have never made an election and have never taken a distribution? It seems like a lot of people know nothing about the elections and stumble upon them like we did and it really makes one worry about their money. To my knowledge, even TurboTax never suggested making elections until this year even though it fills out TD F 90-22.1. In the cover letter, does he need to mention anything about his citizenship status? He was a Canadian citizen and moved to the US on a TN visa, became a perm. resident and then became a US citizen in 2002.

Thanks so much for your help!

nelsona · Post by **nelsona** » Mon Feb 05, 2007 12:47 am

The rule of thumb is 6 years. The IRS accepts when you come forward on your own. When they discover on their own, they hammer you.

My advice back then may have been specific to this case.

Leslie · Post by **Leslie** » Mon Feb 05, 2007 8:39 am

Thanks Nelsona! We'll get the paperwork in right away. Out of curiosity, which is penalized more for not being included in the return, the TD F 90-22.1 or the election of deferral?

Leslie · Post by **Leslie** » Mon Feb 05, 2007 9:28 am

Another question. If we intend on collapsing the RRSP this year or the next couple of years, are there any bad implications in electing to defer the taxes this year and past years? I can only see electing to defer taxes as a good choice regardless of when the RRSP is collapsed.

nelsona · Post by **nelsona** » Mon Feb 05, 2007 1:47 pm

It is better to defer US income declaration until you have Cdn taxes to match the US tax.

hungarianpride · Post by **hungarianpride** » Mon Feb 05, 2007 3:51 pm

I am in a similar situation to a lot of people who have posted about RRSPs (moved to the US in 2002, cashed in RRSPs in 2006, only to find out after the fact that I was supposed to be completing 8891s, etc). I have looked thru previous posts on 8891s and think I have a pretty good handle on those forms. What I haven't been able to find is a posting that describes EXACTLY what is involved in filing an election under Rev Proc 2002-23. Is there a specific form that needs to be completed (is there a link to a template?).
Any help on this would be appreciated.

nelsona · Post by **nelsona** » Mon Feb 05, 2007 4:53 pm

I provided templates on canadatotwincities.com years ago. I thnk they are still there under the taxation or RRSP links.

hungarianpride · Post by **hungarianpride** » Mon Feb 05, 2007 5:37 pm

Found them! Thanks!! They look easy to complete, especially since I have straightforward type elections.
I only have a couple more questions, then I think I'm good to go.

For 2002, I will file an election under Rev Proc 2002-23, and will file 1040x with 8891s for 2004, 2005 (8891s are included in 2006 TurboTax, so I won't need to amend, will just file). What about 2003 - Do I use an 8891 or a file an election under Rev Proc 2002-23?

Finally, once I've completed these forms, where do I send them?

Thanks for all your assistance, this forum is a great help!

nelsona · Post by **nelsona** » Mon Feb 05, 2007 5:48 pm

For 2003 you need to send in an RP 02-23 statement with the year-end value added on the last line. This was to satisfy requirements specific to that year.

You send them where Ttax tells you to send them.

hungarianpride · Post by **hungarianpride** » Tue Feb 06, 2007 9:24 am

Thought I was done, but as I was working on this last night and doing more reading, I realized I've got other questions, this time about the TD F 90-22.1. It looks like if you have any foreign accounts over $10,000 US, you are supposed to be completing this form annually. As I was unaware of this (as well as RRSP reporting in general), we have never done this. As it turns out, none of our RRSP accounts ever reached this amount, so we should be OK there. But my wife was a teacher in Ontario for a few years before we left in 2002, (enough years to be fully vested) and her contributions and interest are around $25K CDN. Do we (she) need to be completing a TD F 90-22.1 annually to report this?

nelsona · Post by **nelsona** » Tue Feb 06, 2007 10:01 am

The TD form is for foreign ACCOUNTS over which you have signing authority, and the $10K threshold is anyday during the year, did YOU have a sum total in all your acounts ov $10K. If you do, then you need to report ALL accounts.

denisharlock · Post by **denisharlock** » Tue Feb 06, 2007 10:14 am

Would I be correct in assumng that if one only hold RRSPs in Canada, and no other acocounts - that filing yearly 8891 is enough to satisfy Uncle Sam. I can forget about TD F 90-22.1 ?

Thanx again, Denis