Another NR4 with code 43 into US tax question

[vincebouchard]

Hi Nelsona, I know you have answered this question multiple time. But I'm getting hit with more tax to pay in the US.
I need to determine the taxable portion of the Gross RRSP withdrawal amount.

Non taxable RRSP (as of date I became US resident in September 2016) $50,433 USD
Gross withdrawal in 2019 (As of date of withdrawal) $49,408 USD (my stocks went down)
Net Taxable portion should be $0 or negative since I lost money (-$ 1,025) during 3 years.

Total Taxes paid to Canada for lump sum (25%) on Gross withdrawal $12,352 USD

On form 1116, The net foreign taxable income should be $0 or -$ 1,025 , not $49,408 USD right?
My accountant is adding the entire amount as an income and I get hit with more tax to pay since it raise my US income from last year to $171k.

Is it possible to declare a loss on form 1116?

Thank you

[nelsona]

The taxable portion is ZERO. Once you close the RRSP, then you can claim a loss only on schedule A.
So, there is no point claiming tax this on 1116, Use it on Schedule A instead, hoping that along with you other itemized decutions, you will get something out of it.

Your accountant is incorrectly including the gross as net income. The gross ($49K) and net (0) go on the pension line of the tax return.

[nelsona]

I'm assuming this is your personal RRSP, not some pension rollover.

[vincebouchard]

Thank you, that was my assumption.
Well, it was a personal LIRA converted into an RRSP for withdrawal. Hope that doesn't change anything.

Do you have the link where you describe the rules for non-taxable vs taxable ratio?

[nelsona]

Since it was a LIRA, it is 100% taxable in US, so you can use the Cdn tax as a credit. Only personal RRSPs have some US tax-free portion.

IRS Code 72(w) I believe.