If I understand correctly, someone living and working in the US can still contribute to RRSPs if they are deemed or factual residents of Canada for taxation purposes.
My question is, if we file US income in the US, and world income in Canada, can new RRSPs be used as a deduction from world income enough to bring the tax owed down to zero. For this question, there is zero Canadian source income and only US source income, being reported in Canada as world income.
Thanks in advance.
RRSP on World Income
Moderator: Mark T Serbinski CA CPA
As long as you have RRSP contribution room, you can make contributions, but to what end? You would have a Canadian deduction, but none in the US.
Though, you might want to consider making an RRSP contribution, but only enough so that it offsets the extra Canadian tax after the foreign tax credit on the T1 for the US tax paid on the US income. I'd have to run some scenarios, but that might work.
Though, you might want to consider making an RRSP contribution, but only enough so that it offsets the extra Canadian tax after the foreign tax credit on the T1 for the US tax paid on the US income. I'd have to run some scenarios, but that might work.
RRSP on US Income
Yes, thank you. I was just thinking about reducing the tax to zero after declaring world income and all foreign tax credits. This year's calculation would have us owing and additional $4000 to Canada, so an RRSP could eliminate that if Canadian source income is not a requirement. I thought that RRSP could only be deducted from Canadian Source income, so that's what I need to know. Does US source income count to giving us an increased RRSP balance for next year? I guess the question is, once I do a return with World income, is it then treated the same way as Canadian income. I'm trying to rationalize why Canada would give me a tax break on income and tax money that they're not even getting. Thanks in advance.