RRSP withdrawal

[raj]

I need to report my RRSP withdrawal to IRS. Reading this forum I summarized the following as an example:

RRSP value is: 110k USD
RRSP value when I left (Emigrate) from Canada to US:100k USD
CRA withhold: 25% of 110k= 27.5k

In TaxAct:

- Will report Taxable pensions and annuities:
Foreign pension received= Gross RRSP value= 110k
The taxable amount of foreign pension= Actual gain after I left Canada= 10k

- Will report as General category income for 1116 (Foreign tax credit)
Foreign source other income including interest: 10k
Other foreign taxes paid or accrued in U.S. dollars: 27.5k

Can you please advise, if I am on the right track?

Thanks in advance.

[nelsona]

Yes, except that because you only had $10K of US taxable income, using form 1116 will likely give you only 2-3K back as a credit, if that
You may wish to use the foreign tax as an itemized deduction on schedule A (along with other deductible items) which would probably reduce your taxes more that the credit.

In any event, try it both ways and see.

[raj]

Thanks, Nelsona. I got a better return with a foreign tax credit with my actual RRSP amount of 37k (100k was just an example).

I accidentally plugged in the Gross RRSP amount as income in the form 1116 along with 25% CRA tax. This gave me an unexpected huge return. Wondering why I shouldn't use the gross income instead of taxable income in the form 1116?

Thanks again.

[nelsona]

Because the amount of foreign INCOME is not the gross amount, unless you are reporting the gross amount as 100% taxable.

Its the taxable portion that goes into 1116.