Tracking RRSP gains for IRS purposes

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CdnAmerican
Posts: 245
Joined: Tue Aug 30, 2011 12:15 am

Tracking RRSP gains for IRS purposes

Post by CdnAmerican »

Quick question about RRSP withdrawals. I am a dual US/Cdn citizen, living in Canada. I've invested into my RRSP for years, but haven't deducted the contributions from my US tax return. Let's say I have contributions of $60K, with gains of $40K, for a grand total of $100K. If I take out $10K from my RRSP as income, how do I declare this to the IRS, noting that the gains have been gradual (and non-declared across investment buys/sells, since no money was withdrawn) over the years? Thanks in advance!
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nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Tracking RRSP gains for IRS purposes

Post by nelsona »

You assess your RRSP at the beginning of each year. At that time you determine the contributions, and the growth. Let's use your example:'

You have a 100K RRSP; 60k contributed, and 40K growth.

So, whatever you take out this year, 40% will be taxable, 60% will be non-taxable, in your 10K withdrawal, $4000 is taxable.
For your tax credit on the US return, figure out the portion of your income represented by the RRSP withdrawal vs your net income on your CDn return, and the eligible CDn tax will that proportion of your overall tax bill for the year, figured on your CDn tax return,

Assuming you do nothing else, next year your non-taxable portion will be $54K (60K - 6K used this year), and you repeat the calculation.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
CdnAmerican
Posts: 245
Joined: Tue Aug 30, 2011 12:15 am

Re: Tracking RRSP gains for IRS purposes

Post by CdnAmerican »

That's really helpful, and makes good common sense. Thanks!
Not a professional opinion.
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