K1 revenue inside an RRSP - can I get the 37% tax reduced?

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hoffer.davidm
Posts: 4
Joined: Thu May 20, 2021 2:58 pm

K1 revenue inside an RRSP - can I get the 37% tax reduced?

Post by hoffer.davidm »

I own shares of several US based LPU's that I recently bought inside of an RRSP. First round of dividends comes in and 37% held back.

I have no other US income at all. The dividends amount to about $20K per year, so $7400 held back in taxes. That would put my US income at about a 12% tax rate if I understand correctly. So... If I were to go to the expense of filing my taxes in the US, would I get a refund for the difference? If so, it would be about $5,000. Which raises the question, does the refund then become additional income for my Canadian tax return because even though the dividends are inside the RRSP, the refund is not?

And of course, how much would it cost for you to prepare my IRS tax return every year? If the price is reasonable, I will probably retain these stocks and even buy more. If it costs more to file than I get back in rebate though, there's little point keeping them.

Thanks in advance!
DavidH
ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

Re: K1 revenue inside an RRSP - can I get the 37% tax reduced?

Post by ND »

RE: That would put my US income at about a 12% tax rate if I understand correctly.
How did you conclude a 12% rate instead of 30% FDAP rate on NRA?

So... If I were to go to the expense of filing my taxes in the US, would I get a refund for the difference?
Should you not instead be looking at the diff between the 37% wh rate and 30% FDAP rate for refund of 7% wh?
hoffer.davidm
Posts: 4
Joined: Thu May 20, 2021 2:58 pm

Re: K1 revenue inside an RRSP - can I get the 37% tax reduced?

Post by hoffer.davidm »

Well I don't know. That's why I am asking!
hoffer.davidm
Posts: 4
Joined: Thu May 20, 2021 2:58 pm

Re: K1 revenue inside an RRSP - can I get the 37% tax reduced?

Post by hoffer.davidm »

Seems to me that if I file US taxes I am subject to the same taxation rate as a US citizen. Which in the example I give above, would put me qat 12%. FDAP would have nothing to do with it.
nelsona
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Re: K1 revenue inside an RRSP - can I get the 37% tax reduced?

Post by nelsona »

nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
hoffer.davidm
Posts: 4
Joined: Thu May 20, 2021 2:58 pm

Re: K1 revenue inside an RRSP - can I get the 37% tax reduced?

Post by hoffer.davidm »

Good link, but ultimately doesn't answer my question. The article is specific that investments held in RRSP's (mine are) are beyond the scope of the article. It also provides not advice regarding getting a refund by filing in the US and showing income taxes at a lower tax rate than the withholding tax.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Re: K1 revenue inside an RRSP - can I get the 37% tax reduced?

Post by nelsona »

The link was in response to 'nd's questions.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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