My RRSP cashout understanding!!

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

My RRSP cashout understanding!!

Post by flames9 »

Ok I have read this site for a few yrs now and I thought I had a good understanding of what had to take place when I cashed out my RRSP.

When I entered the USA my book value of the RRSP was $40,381 Cdn When I cashed them out, they were worth $40,013 Cdn, so I actually lost money!! Plus the Cdn govt did deduct a 25% non resident tax. For the 2 yrs I have been down here I did file form 8891.

Now I cashed them out, I found TurboTax wasn't that helpful, so we sent our taxes away to an accounting firm (we file married jointly) They do not know how to handle the RRSP withdrawal issue. They say we should be taxed on the $40013 (of course convert it to US$) then get credited with the $$ I paid in tax from Canada. I called up IRS, they were not sure at first either, but his "thinking" was the same, i get taxed on the whole $40,001, but use form 1116 and get credit for the 25% taxes Canada deducted!! Soo confused. Not even sure what #'s to put now on Form 8891!!! Any help is greatly appreciated
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

There are only a dozen people who know how to treat RRSPs in US.

Review my oft-posted method of taxation. As a regular here you should have known this.
8891 has also been covereed.


One thing though: you need to calculate your gain based in US$, so you need to know the book value in USD, at the USD value when you arrived. You then need to use the USD value when you collapsed your RRSP. The toatl in US goes on 16a, and the difference in US goes on 16b. 16b is your taxable amount.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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