RRSP Taxation in New Jersey (NJ)

[jyu201]

Hello,

I moved to New Jersey a few years ago and kept my Canadian RRSP accounts. The cross-border tax accountant I used for the first two years did not include any interest, dividend, and/or capital gains (I have not sold anything within the accounts) generated in the accounts since he said the Canada-US Tax Treaty allowed for tax deferral (until I actually start withdrawing) and I have been completing the FBAR every year.

I recently came across a Reddit post that mentions although the IRS allows tax deferral on RRSPs, not all states follow the same tax rules. New Jersey was mentioned, but I am trying to find specific NJ tax bulletins/codes/rules that mention interest and dividends within RRSPs are taxable in the year earned. There are a lot of articles on California, but I can't seem to find anything on New Jersey.

Any guidance or specific references on New Jersey's stance on RRSP would be greatly appreciated.

Thanks in advance!

[nelsona]

Yes, there was mention in the past of something in NJ, but that has never come to pass. Assume that the NJ treats the income as the IRS does.

[jyu201]

Great! I'll continue to treat the RRSP the same in NJ as I do for IRS.

Appreciate the quick response and all the advice you provide in the forums :)

[btaylor70]

@nelsona

Can you provide any link or pointers on this? - My tax filing is done by one of the big 4 accounting firms and their position is that RRSP income is taxable in NJ. Is there a explicit tax code that either indicates that NJ is following the Fed statutes on RRSP income or that they are overriding it?

Thank you

[nelsona]

They would have to be the ones showing you the tax code reference. I know of none. We are talking INTERNAL income, not withdrawals.

[btaylor70]

@nelsona

What I am told is that NJ does not honor federal treaties - https://apps.irs.gov/app/vita/content/0 ... 01_001.jsp

And RRSP income is not a qualified investment income as defined by NJ Rev Stat § 54A:5-1. 54A:6-14

[btaylor70]

I am being told that NJ does not honor federal tax treaties - https://apps.irs.gov/app/vita/content/0 ... 01_001.jsp

And RRSP is not a qualified investment fund as defined by NJ Rev Stat § 54A:5-1. 54A:6-14

[nelsona]

Most states do not "honor" tax treaties. However most abide by the IRS definitions of income, and follow the information on 1040.

In my opinion, the accountants are being overly aggressive, without state guidance. California taxes RRSP internal income. However they issued specific guidance on this years ago. Ask them to provide NJ's specific guidance on this, or ignore their request for any information on your RRSP until and unless you withdraw funds from the RRSP.