I'm a (Canadian born) US resident who closed all of my RRSPs in 2012 (full distribution / disbursement). Received NR4s for each closed RRSP.
The RRSPs were crystallized (buy new mutual funds inside my RRSPs) when I moved to the states in 2000 so I knew the exact value in US currency at that time. Due to the challenging stock market over the last 12 years, I've actually taken a Loss (as opposed to Capital gain).
Example, for one of the RRSPs: Cost Basis when I moved to USA in 2000 was $15619 USD. After stock depreciation, I sold the RRSP in 2012 for $12248. 25% Canadian non-resident tax was withheld ($3062). Capital Gain (LOSS) was ($3,371) -- that is $15619 - $12248 = $3371 loss.
[b]So my question is[/b], can I claim a Loss on 1040? I believe that I should use lines 16a and 16b for this. Seems like 16a should be the full disbursement of $12,248.22. For 16b (taxable amount) should I enter $0 or -$3371. If I claim -$3371 it will reduce my entire income which is obviously desirable, but I don't want to make any errors in submitting this to IRS.
Thanks!
P.S. I'll also be completing Form 8891 and Form 1116 (to obtain Foreign Tax Credit for the 25% tax paid of $3062).
Claiming RRSP Loss (after distribution) on 1040
Moderator: Mark T Serbinski CA CPA
8891 should have been filed every year. If you report them tis year without correcting previous you could have a big penalty.
But, to your question, you can only claim the RRSP loss once you have collapse ALL RRSPs, and you do so thru schedule A line 28, not line 16b.
your 8891 should show zero taxable, you don't need 1116 since you have no taxable foreign income. Instead you use the Cdn tax as a deduction on line 8 of shedule A.
With thios deductions, beware of AMT.
But, to your question, you can only claim the RRSP loss once you have collapse ALL RRSPs, and you do so thru schedule A line 28, not line 16b.
your 8891 should show zero taxable, you don't need 1116 since you have no taxable foreign income. Instead you use the Cdn tax as a deduction on line 8 of shedule A.
With thios deductions, beware of AMT.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
This would depend on your other RRSP assets. Your RRSP is not treated as multiple investments. It is one investment wiith a cost basis.
I've explained how one writes down the non-taxable portion of an RRSP over several years.
But one cannot declare a loss on 16b, and can only declare a 'terminal' loss on schedule A when all RRSPs are collpased.
I've explained how one writes down the non-taxable portion of an RRSP over several years.
But one cannot declare a loss on 16b, and can only declare a 'terminal' loss on schedule A when all RRSPs are collpased.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Nelson: Could you kindly reference your previous suggestions on such calculations.
I have tried to find methods for calculating nontaxable portions, but can't find any on IRS site. The only reference given pertains to annunities. Is there any clear authentic text by IRS on it, or it has been left for interpretation by Tax Accountants. I have read several contradicting suggestions on this subject. Some suggest calculation of gain/loss using purchase price, some suggest to use value the day resident status was changed to US.
I have tried to find methods for calculating nontaxable portions, but can't find any on IRS site. The only reference given pertains to annunities. Is there any clear authentic text by IRS on it, or it has been left for interpretation by Tax Accountants. I have read several contradicting suggestions on this subject. Some suggest calculation of gain/loss using purchase price, some suggest to use value the day resident status was changed to US.
IRS does not decide. You decide. its out there, or maybe someone else can find it for you.
November is the time to be asking in depth questions here, not now.
November is the time to be asking in depth questions here, not now.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks. May be it can be discussed next November. I agree that IRS does not decide. Nevertheless, there has to be some basis to decide or interpret. I can understand what to do if entire RRSP was to be collapsed in one shoot, but not sure how to treat individual capital gains/losses within a single RRSP when only small amounts are to be taken out as distribution. This is not an immediate problem as I have no plan to take any distribution for several years.