Instead of backfile, pay tax on RRSP annually.

Atlaas02se · Post by **Atlaas02se** » Fri Jun 22, 2012 9:01 am

For those who have been filing 1040, but did not file 8891 and messed up on the FBAR.

Instead of backfiling 8891 + 1040X for six years, how about pay US tax on the RRSP for the last 3 years and elect 2011 as the first year on 8891.

The FBAR still has to be amended for the last six years.

Advantage- disadvantage to this?

tsanaha · Post by **tsanaha** » Fri Jun 22, 2012 9:48 am

Well, in case of OVDI, that means your RRSP will be in the base of in lieu penalty -- because it had been tax non-compliance.

Mach7 · Post by **Mach7** » Fri Jun 22, 2012 10:40 am

Don't take this the wrong way, but you need to give yourself a kick in the rear.

Why would you want ot be 'double' taxed on your RRSP...as you will be paying the Cdn government there share @ withdraw.

As for the FBAR....if you messed it up, then file an amendment 120 days later...simple.

I filed my back returns for 6 years and included an 8891 form for each year. I DO understand a lot of individuals are including a PLR, but have been told that the IRS has been accepting 8891 without one.

GABALDON51 · Post by **GABALDON51** » Fri Jun 22, 2012 2:18 pm

Good points!! but I too need to know how to backfile 8891s. I filed the first time in 2011, but now realize I should have back filed to 1998 to protect my rrsps. Is it too late to fix this problem? I never had enough earned or unearned income to file a 1040, that is why I never knew about the 8891. I am sending off 7 years of FBAR's, hoping they will accept them without penalties!

Mach7 · Post by **Mach7** » Fri Jun 22, 2012 5:55 pm

Not sure if beginning to 'just file' as of 2011 is a good idea.

You might want to look at the different ways to become compliant...as far as i know there are 3...the OVDI, Ouiet Disclosure, and Noisy disclosure.

I did the Noisy disclosure by filing 6 years of back returns.

You should familiarize yourself with the IRS fact sheets, namely the December 2011 fact sheet.

I am not sure why you want to back file to 1998??

You might want to seek professional advise before you start firing off paperwork, you might end up in a worse situation.

Dalthien · Post by **Dalthien** » Fri Jun 22, 2012 11:10 pm

If you're not backfiling 8891, then you have to backfile 3520 instead. 8891 is a replacement for 3520 for RRSPs.

And 3520 is an exponentially bigger pain in the ass than 8891 - so I can't imagine why anyone would ever choose 3520 over 8891.

tsanaha · Post by **tsanaha** » Sat Jun 23, 2012 8:03 am

My understanding is that f8891 is a replacement of f3520 for RRSP. No matter you want to defer tax or not -- f8891 has to be filed. So there is no such an issue of f3520.

f8891 has been the form for RRSP since 2003. Before that, it was f3520.

An RRSP is a foreign trust. However, there is no reporting requirement for an RRSPâ€“Form 3520 and Form 3520-A are not required. Since the exception to the general rule (3 years for the IRS to audit you) in Section 6501(c)(8) does not apply, we are back to the normal audit cycle.

Nelsona can certainly explain this much better

GABALDON51 · Post by **GABALDON51** » Sat Jun 23, 2012 10:57 am

I have a RRSP that was opened in 1998,and one that was opened in 2000.
These are both spousal RRSP's, funded by my NRA spouse to save him tax.

Until 3 weeks ago, I never knew I had to file a 8891 (or equivalent), my unearned income, outside of the rrsp unearned, not yet distributed income, has always been below the reporting threshold, therefore no 1040's, = no 8891. I just need to figure out the best way to report the spousal RRSP's.
Thanks!

nelsona · Post by **nelsona** » Sat Jun 23, 2012 11:15 am

As tsahana ststes, you must report 8891 regardless, and as others mention, if you do not elect todefr, you are on the hook for SIX years back taxes and penalty.

And it won't save you anything in the end.

Backfile 8891 and elect to defer.

GABALDON51 · Post by **GABALDON51** » Tue Jun 26, 2012 3:14 pm

Thanks nelsona! I already mailed my 1040 for 2011, and if I back file 8891 going back to 2005, my question is what do I put on line 6b for 2005, can I just make that the first year the election came in to place? and then file the other years, stating that 2005 was the first year that I chose to defer? The problem could be that since 2011 has been filed, the dates won't match ....
any advice? I have no idea how closely they look at these forms!

nelsona · Post by **nelsona** » Thu Jun 28, 2012 9:32 pm

yes, that is what you have to do.