Need my son report RESP EAP in tax return?

[snowbird]

EAP is earned or unearned income?
My son get 10k EAP last year, need he file tax return?

[complete]

I responded on a similar thread but posting it here.

With the changes to the forms 3520 and classification I don't see this money as being from a trust.
Same for fellowship/scholarship grants - I'm not sure this applies.
This is simply money saved for school and used for school expenses, like a 529 Plan.
That said, I am not sure.
According to Nelsona, the NR4 with code 24 (RESP) would go on line 1 of the 1040 as a wage.
With that statement it would be earned income as per US taxes.
It can't be passive or interest income and be on line 1.
As long as the aggregate total of 'earned income' is <$12550 then a tax return isn't required.
Note that I am not considering the passive income requirement for $1100 which, if applicable for the dependent, would lead to a filing requirement.

[nelsona]

Just because 3250 has been discontinued for RESPs dpes NOT mean they are not trusts, just like RRSPs are still trusts.

If you treat it as unearned trust income, then it is other income (line 17z of schedule 1) and will be taxable. You can use any CDn tax as a credit using 1116.

If you treat it as "wages: it goes on line 1, and will not be txed if less than $12000.

I'll let you decide how to treat it.

[snowbird]

Thanks Nelsona for your detailed reply, just one thing needs your help to clarify.

As I posted RBC document before
"Where someone else is a subscriber and/or contributor to
the RESP, and the RESP is a foreign grantor trust in respect
of such persons (as discussed earlier), a U.S. beneficiary
is not subject to U.S. income tax when they receive a
distribution from the RESP, provided the necessary U.S. tax
filings have been made."

I also find a link in forum 6 years ago
viewtopic.php?t=10707

Both states EAP(distribution from RESP) is not subject to US income tax, why this info is not applicable?

[snowbird]

I asked a local accountant, he said no need report EAP in my son's 1040.

RESP is tax deferred in Canada. When cash out EAP, it's counted as Income.
In US, we pay tax for RESP income every year, like stock capital gain and deposit interest, distribution from RESP shouldn't be treated as income for dual tax.
Proc 2020-17 covers retirement and non-retirement trust, "eligible individual" requests to report distribution as income, which points to retirement one with tax defer.

Please check if this info is correct.

[fazert]

But is it true? It seems to me that something is very wrong here.