RRIF lump sum withdrawal - Form 8833 Tax Treaty

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CASAMARROM
Posts: 4
Joined: Thu Jun 18, 2020 2:34 pm

RRIF lump sum withdrawal - Form 8833 Tax Treaty

Post by CASAMARROM » Thu Jun 18, 2020 3:43 pm

Hello,
We are Canadian citizens living in the US since 2014 and became American Citizens as well.
We prepared our own taxes using TurboTax except the first year. We also file F-bar with our foreign accounts.
In 2019 my husband made a full withdrawal from his RRIF and had 25% tax withheld in Canada. He have received the NR4 for that withdrawal. I did report the gross amount of NR4 on Form 1099-R.
I also applied to Tax Credit for the withdrawal, filing Part I and Part II of Form 1116 (General).
I filed an extension with IRS til October 2020 to send our 2019 Tax Return.
I need help to fill Form 8833 Tax Treaty, asking for the "elimination of double taxation"
We can't afford paying a professional to prepare our tax return, moreover the 2019 tax return is almost done.
I really appreciate if anyone there could be kind enough and guide me trough Form 8833.
Thank you.

nelsona
Posts: 16414
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: RRIF lump sum withdrawal - Form 8833 Tax Treaty

Post by nelsona » Fri Jun 19, 2020 2:51 am

There is no need for form 8833. You use form 1116 to get credit for the CDn tax you paid. It is not a treaty issue, it is simply a foreign tax credit issue.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

CASAMARROM
Posts: 4
Joined: Thu Jun 18, 2020 2:34 pm

Re: RRIF lump sum withdrawal - Form 8833 Tax Treaty

Post by CASAMARROM » Fri Jun 19, 2020 4:05 pm

Thank you Nelsona. It is great to learn we do not need 8833. I had read somewhere, that there would be a fine of $1000 if an individual fails to report 8833.
Because it was a Lump Sum, this account has been closed and it will not be reported next year on F-Bar neither 8938. It is Correct?
I have reported the NR4 RRIF withdrawal on 1099-R.
On 1116 Part I used a separate column from (CPP+OAS) for this RRIF withdrawal. Should I had added all CPP+OAS+RRIF in the same column?
Thank you very much for your help.

I read your explanation posted bellow about Taxable and Non Taxable Rate.
I am not sure where I should use those calculations.
I appreciate your advice.

RE: US tax for RRSP RIF distribution Taxable and Foreign tax Credit
by worryfreeinvestor » Fri May 31, 2019 7:52 pm
nelsona wrote:

Each year you take out money, you need to determine the taxable ratio based
on (a) the non-taxable amount in your RRSP/RRIF and the total amount you have.
The non-taxable portion when you first begin withdrawing is the $200 you had when you arrived.
The taxable portion is above that.
So, if at beginning of year you had $300, then the taxable ratio is (300-200)/300 = 1/3
Si, if you took $50, your taxable portion is $50 *1/3 = $16.67 and the non-taxable is $33.33.
Next year, your non-taxable portion is $200 - $33.33 = $166.67 and so on.
Thank you. By "non-taxable portion" do you mean the following? That is, if next year the BOY value of the RRIF is $250, the taxable ratio is ($250-$166.67)/$255=1/3?
It looks constant if the BOY valuation is simply the previous year balance minus the distribution. But unless i take my distribution on December 31, there could be variance, right?

cullen
Posts: 41
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Location: Greenville SC

Re: RRIF lump sum withdrawal - Form 8833 Tax Treaty

Post by cullen » Sat Jun 20, 2020 8:57 am

You must be in a state without an income tax or one that allows a foreign credit as not all states are hospitable to foreign income
Joe

nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: RRIF lump sum withdrawal - Form 8833 Tax Treaty

Post by nelsona » Sat Jun 20, 2020 1:13 pm

I can't go into detail on how to calculate the taxable portion, I have covered this too many times!

All the income is considered general income, so you list it on one entry on 1116 form

If the account was closed in 2019, it should still appear on your 2019 FBAR.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

CASAMARROM
Posts: 4
Joined: Thu Jun 18, 2020 2:34 pm

Re: RRIF lump sum withdrawal - Form 8833 Tax Treaty

Post by CASAMARROM » Sat Jun 20, 2020 2:36 pm

Thank you for your reply,

Nelsona, please just let me know which line of 1116 I should entry those calculations.

I am afraid I am missing something important, I may be all wrong! I feel I am missing the part of reporting of those calculations.

This is how I do 1116: - I just enter exactly the amounts from NR4:
- in 1116 Part I column A.
-in Part II, I do enter taxes withheld in Canada dollar from NR4 and in US dollar
- Part III and IV, is done automatically by TurboTax and that is it for form 1116.

I appreciate your advice.

nelsona
Posts: 16414
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: RRIF lump sum withdrawal - Form 8833 Tax Treaty

Post by nelsona » Sat Jun 20, 2020 5:25 pm

sounds right.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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