RRSP tax 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.

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formerexpat
Posts: 9
Joined: Thu Mar 18, 2021 4:41 am

Re: RRSP tax in USA

Post by formerexpat »

Are you already out of Canada now (for good)? If so, then you are limited; see bottom.
If not, then talk with your accountant about options on taking out as a resident vs non-resident.

If you are no longer a resident, then notify the holder of your RRSP, etc. of your new address (via email, phone, etc). By law, they need to update their records. After that (can be same day), then find out where their withdrawal forms are and fill out and fax/email it in. By law, they have to take out correct withholdings. No need to contact them by phone for the withdrawal piece; the forms I did (from 2 different RRSP holdes) were similar and I could ask for a $ amount or check a box for ALL.
Bluebell
Posts: 5
Joined: Tue Aug 24, 2021 6:08 pm

Re: RRSP tax in USA

Post by Bluebell »

I have been out of Canada for over 15 years and have only American citizenship. Thanks for the information! Much appreciated!
formerexpat
Posts: 9
Joined: Thu Mar 18, 2021 4:41 am

Re: RRSP tax in USA

Post by formerexpat »

I had Canada Life & Manulife. I got NR4, T4A, & T4RSP forms I received as you will need to show this on US taxes but actual taxes paid will likely be offset as Capital gains tax in US is 20% max and 25% lump sum withholding in Canada. Note there is one option to receive a payment stream over time where you will only have to have 15% withholding in Canada. I didn't have enough to make it worth my while plus I have another decade to get to retirement age.
nelsona
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Location: Nowhere, man

Re: RRSP tax in USA

Post by nelsona »

RRSP income is NOT cap gains or interest, it is PENSION income, and must be reported as such.

Of course, not the entire amount of the RRSP withdrawal is taxable, only the change since you became a US taxpayer.

This has been explained here many times, including how to determine the taxable portion.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
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Re: RRSP tax in USA

Post by nelsona »

The withdrawals from a RRIF, at a reduced 15% taxation level can start at any age, as long as you only withdraw 10% per year.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
formerexpat
Posts: 9
Joined: Thu Mar 18, 2021 4:41 am

Re: RRSP tax in USA

Post by formerexpat »

Sorry for the confusion, Nelsona, I was referring to USA taxes. I only have to pay US taxes on capital gain portion (since I did not claim putting aside the original RSP deposit in the US, only in Canada). And those taxes are offset by Canada withholding. Had my cross-border accountants who reside in Ontario figure it all out for me with my 2019 US income tax and transferred same knowledge to US accountant for 2020. Alas, I needed my money up front as when I moved back, I didn't have a job and wasn't sure how long it would take (less than 2 months, luckily). Also, the 10% differential in taxes would be made up for much higher returns in US mutual funds compared to Canada mutual funds so I thought it wise to do.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: RRSP tax in USA

Post by nelsona »

As I said, there is no "capital gains portion" of an RRSP in the eyes of IRS. It is reported as pension income.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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