Trading stocks in RRSP while Tax Resident in USA

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
Sid
Posts: 10
Joined: Sat Oct 17, 2020 6:07 pm

Trading stocks in RRSP while Tax Resident in USA

Post by Sid »

Can a person trade stocks in RRSP while being a tax resident in the USA? do you need to report any dividends to the IRS even if you don't withdraw any funds? My understanding is capital gain you don't report until you withdraw funds when you retire, not sure about dividends.

Also, lets say in year one , you buy stocks in RRSP, in year two you go to the US on work visa , file as tax resident and disclose all the RRSP acount, in third year you come back to Canada and file resident tax return, you sold stocks and had capital gain, in fourth year you go back to US and file tax as US resident, will IRS tax you on capital gain you had in year 3 when you were a Canadian tax resident? or IRS will only look at year 4 and not go back . I hope my question makes sense.

Thanks to wonderful people on this site!
cullen
Posts: 48
Joined: Sun Mar 27, 2005 1:34 am
Location: Greenville SC

Re: Trading stocks in RRSP while Tax Resident in USA

Post by cullen »

You really should not be bouncing back and forth and declaring departure and entry that much. The treaty is going to more narrowly define your residency
Joe
Sid
Posts: 10
Joined: Sat Oct 17, 2020 6:07 pm

Re: Trading stocks in RRSP while Tax Resident in USA

Post by Sid »

It was a hypothetical question. When you are on a work visa, it is not your choice to stay in one country if you lose your job.
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Trading stocks in RRSP while Tax Resident in USA

Post by nelsona »

Nothing that happens in your RRSP is taxable in US or Canada until you withdraw the funds FROM the RRSP. Nothing to "declare". Nothing to hide.

You will only be taxed in US on the income generated in the years you file a 1040, be it from dividends or gains, IF you are a US taxpayer at that time of withdrawing the money from RRSP/RRIF.

In any event the US tax you will owe will be miniscule compared to what you owe in canada, so I would not be worrying about that. Just track it, or as was said, make your life simple and stay in one country for a long time.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Sid
Posts: 10
Joined: Sat Oct 17, 2020 6:07 pm

Re: Trading stocks in RRSP while Tax Resident in USA

Post by Sid »

Thank you Nelson for a reply. I am not sure if i understand correctly. Can you please tell me if i can buy/sell in RRSP while a tax resident in USA, , and if i have any gain from selling the stocks, I wont be paying tax on that year, but only when i withdraw funds in the future when i retire? So why, is it that people say to step up your cost while you are in Canada and sell your stocks that you bought long time ago and then re bought them at a current price so you don't accumulate any gain ?

and about staying in one country, its not a person's choice, you could be on TN for a year and then lose your job and come back to Canada, and then down the road get another job , you go there. So, thats why i wanted to know how works. It's very hard to find that info on the net . Thanks for all your help!
Sid
Posts: 10
Joined: Sat Oct 17, 2020 6:07 pm

Re: Trading stocks in RRSP while Tax Resident in USA

Post by Sid »

you said " track it", meaning track when i buy and sell stocks?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Trading stocks in RRSP while Tax Resident in USA

Post by nelsona »

You can trade in an RRSP while living in US, if your RRSP firm allows.

You DO accumulate gain. So you want to minimize the gains arising while in US to minimize US tax, thus the strategy to bump up cost before moving to US. In canada you will be paying tax on the whole RRSP regardless.

So, if you are going to switch back and forth from US to Canada, you will have to track gains in the years you live in US, so that if you remove funds from RRSP in a year that you are a US taxpayer, you will know how much income you need to report to IRS that year.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Maeve White
Posts: 2
Joined: Wed Apr 07, 2021 4:30 am

Re: Trading stocks in RRSP while Tax Resident in USA

Post by Maeve White »

Angels And Airwaves are another bands I think is pretty good. They're kind of similar to My Chemical Romance and Fall Out Boy in that their lyrics are about love and relationships, and their music is generally upbeat and fun. You should visit this https://successayst.com/ source to get access to quality content. It is the best-sounding album I have ever heard.
Post Reply