I have read the entire forum. But I am still confused. As I understand in some places CPA and Nelson have contradictory statements. PLEASE CLARIFY?
Contradictory statements regarding RRSP on forum
Moderator: Mark T Serbinski CA CPA
I don't think there has been any contradictory information as to the ]<u>reporting</u> of RRSPs.
You need to make the RP 02-23 election for every year you've filed a 1040. The rev Proc even suggests how to do this
As to the TD form, however, there is no provision to back-file such a form. I suggest you file the TD form on time this year (june 30) to Detroit.
Even if your RRSP was like a IRA, it is still a FOREIGN accounr (along with your bank account, etc) it is quite clear on Schedule B that if you have ANY such foreign accounts, you have to look to see if you nbeed to file TD form.
You do not send the TD form with your tax return. Again, this is clearly indicated on the form.
Now, as to reporting the income. mark does disagree with all other cross-border tax pros I've contacted.
I say only post-arrival income should be reported on 16b. He says all the withdrawal should be reported.
You are quite fre to consult other pros (which, by the way, I'm not allowed to name here, so don't ask).
<i>nelsona non grata... and non pro</i>
You need to make the RP 02-23 election for every year you've filed a 1040. The rev Proc even suggests how to do this
As to the TD form, however, there is no provision to back-file such a form. I suggest you file the TD form on time this year (june 30) to Detroit.
Even if your RRSP was like a IRA, it is still a FOREIGN accounr (along with your bank account, etc) it is quite clear on Schedule B that if you have ANY such foreign accounts, you have to look to see if you nbeed to file TD form.
You do not send the TD form with your tax return. Again, this is clearly indicated on the form.
Now, as to reporting the income. mark does disagree with all other cross-border tax pros I've contacted.
I say only post-arrival income should be reported on 16b. He says all the withdrawal should be reported.
You are quite fre to consult other pros (which, by the way, I'm not allowed to name here, so don't ask).
<i>nelsona non grata... and non pro</i>
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote">It seems to me that Mark's approach is the most beneficial, in that it allows for the inclusion of a greater foreign tax credit<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
You obviously haven't had much experience with Foreign tax credit.
All NR tax, regardless of how 16b is calculated, is includable towards the foreign tax credit. Every penny is includable. there is no provison to reduce any foreign tax to only the portion which is included on 16b.
Besides, having a carry forward is really of little benefit in the Canad/US scheme of things, since it is unlikley that any Cdn source gen limit income is going to be lower taxed in Canad than in US, so you will ne ver use the carryforward.
The only situation is a small Cdn wage (excludabel from Cdn tax by treaty) or a 217 return.
Every RRSP dollar that is included on 16b is being taxed at least an additional 10% in US (25% - max 15%) credit plus whatever your state rate is.
Coorectly applying IRS rules, and not including all this income, saves that tax, and leaves an even LARGER foreign tax carry forward.
<i>nelsona non grata... and non pro</i>
You obviously haven't had much experience with Foreign tax credit.
All NR tax, regardless of how 16b is calculated, is includable towards the foreign tax credit. Every penny is includable. there is no provison to reduce any foreign tax to only the portion which is included on 16b.
Besides, having a carry forward is really of little benefit in the Canad/US scheme of things, since it is unlikley that any Cdn source gen limit income is going to be lower taxed in Canad than in US, so you will ne ver use the carryforward.
The only situation is a small Cdn wage (excludabel from Cdn tax by treaty) or a 217 return.
Every RRSP dollar that is included on 16b is being taxed at least an additional 10% in US (25% - max 15%) credit plus whatever your state rate is.
Coorectly applying IRS rules, and not including all this income, saves that tax, and leaves an even LARGER foreign tax carry forward.
<i>nelsona non grata... and non pro</i>
IRS phone-line is incorrect on this (they usually are, even on more basic questions).
I have explained exactly what to report on 16b:
Interest received after your moved, and capital gains based on the book value when you arrived. Book value is the cost basis, not the market price.
<i>nelsona non grata... and non pro</i>
I have explained exactly what to report on 16b:
Interest received after your moved, and capital gains based on the book value when you arrived. Book value is the cost basis, not the market price.
<i>nelsona non grata... and non pro</i>
In another thread I read somebody was trying to defend his position and wrote about his interpretation of IRC Chapter 1, Sub-chapter B, Part II, Section 72 (w) But this section is for cross reference not for non-residents. I don't know what he was quoting there saying the whole withdrawal had to be included on line 16b
My argument against his interpretation, which agrees with the expert at Deloitte in Canada, as well as all other major cross-border experts, is that RRSPs are TRUSTS, and are certainly NOT employer sponsored pensions.
It should also be pointed out that mark took the position that RRSP withdrawals are 100% reportable long before 72(w) was enacted in October 2004.
Right or Wrong, Mark's advice is unique in the industry on this CRUCIAL matter.
I'll leave you to decide what to do.... or find advice elsewhere, as I have.
<i>nelsona non grata... and non pro</i>
It should also be pointed out that mark took the position that RRSP withdrawals are 100% reportable long before 72(w) was enacted in October 2004.
Right or Wrong, Mark's advice is unique in the industry on this CRUCIAL matter.
I'll leave you to decide what to do.... or find advice elsewhere, as I have.
<i>nelsona non grata... and non pro</i>
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote"><i>Originally posted by sajith</i>
I am in a isolated little town in the mid-west. I am doing the research as much as I can but I am not going any where. I don't know any canadian to talk to either. Please send me a list of cross border CPAs I can talk to regarding this unbearable issue of monster tax problems. It is a great big mess!!!
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
There is a huge amount of information on this board and on the previous board at http://grasmick.com/board/
Nelson has given freely of his time for years and has provided help to a great number of people.
So, my advice is: learn to use Google.
Cross border CPA's are not hard to find this way. Mind you, there are very few who will be able to competently talk about the issues.
Carson
I am in a isolated little town in the mid-west. I am doing the research as much as I can but I am not going any where. I don't know any canadian to talk to either. Please send me a list of cross border CPAs I can talk to regarding this unbearable issue of monster tax problems. It is a great big mess!!!
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
There is a huge amount of information on this board and on the previous board at http://grasmick.com/board/
Nelson has given freely of his time for years and has provided help to a great number of people.
So, my advice is: learn to use Google.
Cross border CPA's are not hard to find this way. Mind you, there are very few who will be able to competently talk about the issues.
Carson