RRSP and 1099-DIV dividends!

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Dshee12453
Posts: 6
Joined: Sun Mar 31, 2013 12:58 pm

RRSP and 1099-DIV dividends!

Post by Dshee12453 »

Hello,

I am a Green card holder in the US for the last 10 years, and left my RRSPS intact in Canada. I have filed the 8891 forms for the RRSPs ever since I became a Green card holder.

I have noticed over the last few years, I have received 1099-DIV forms for the RRSPS that include oridinary dividends AND tax withheld.

I am totally confused. If I file the 8891 (electing to deferring tax), I do not need to report the dividends on the 1040, line 9a correct? It seems the instructions on 8891 and 1099-DIV contradict each other.

Not only that, but I am confused why there is withholding tax on the 1099-DIV if this is a registered account. Surely my broker firm is aware it is a RRSP account! I have not paid attention in past years but the dividend was significant this year (over $900), and tax witheld was around $260.

Any help would be appreciated. I want to be fully compliant with the IRS, and need to know if I need to file an ammended return to include the dividends on the 1040 (I already filed the 8891 with the tax return for this year).
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

your rrsp should not have had tax withheld. you need to contact them and have this stopped. they shoudl already know you live in US (right?)

But has a US taxpayer, you could simply use any US tax withheld along with any other tax that was withheld, and ultimately get it back.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Dshee12453
Posts: 6
Joined: Sun Mar 31, 2013 12:58 pm

Post by Dshee12453 »

Thanks for the response. Yes, they do realize I live in the US, and they do mail my statements to my US address. I will contact them to get this corrected.

What worries me is they have been submitting 1099s to the IRS for my RRSPS. My understanding is this should have never occured. Someone from the IRS may detect that my income tax filings do not match the 1099 income (someone not familair with the 8891s) and could trigger an audit. Should I just wait and see if they contact me?

thanks
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Like I said, your 8891 election already exempts you from US tax on your RRSP (eho cares if some phlunkie doesn't know this).

Just remember to use the tax you paid towards your tax bill. Its no different than tax withheld from your paycheck.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
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Post by nelsona »

By thwe way, when you talk to your brokerage, you can cite Treaty Article XXI paragraph 2(a). It doesn't matter if you are US resident or not. RRSP's are exempt from US withholding, even for dividends from US companies.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Dshee12453
Posts: 6
Joined: Sun Mar 31, 2013 12:58 pm

Post by Dshee12453 »

Here is the update. I called my broker, and they mentioned the RRSP dividends were taxed because they never received a form W9 from me. They mentioned the W9 has to be filed with them and then my dividends will be tax exempt.

I did not know you had to file a W9 form with the broker.

As I mentioned, I have filed the 8891s every year, but it appears my dividends were still taxed at the witholding rate of 28%.
I did not notice until this year because the amounts were very small.

Unfortunately I cannot claim back the witholding taxes from past years,

I hope this will not be a problem since I have been filing 8891s claiming tax exempt status, but at the same time there has been taxes withheld. Any suggestions? Do I need to inform the IRS about the discrepancy?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You certainly CAN get the US taxes back. All the broker did was send the withholding to IRS. Since you file a 1040 every year, simply add the withheld tax to line on 1040 that is income tax paid during year. That is the whole point of issuing a 1099-div. you can go back 3 or 4 years.

The only thing that can't be done is putting the money back intop your RRSP.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
Dshee12453
Posts: 6
Joined: Sun Mar 31, 2013 12:58 pm

Post by Dshee12453 »

Thank-you, I appreciate your guidance.
worryfreeinvestor
Posts: 145
Joined: Thu Mar 24, 2005 6:17 pm
Location: Seattle, WA

Post by worryfreeinvestor »

I'd recommend switching RRSPs to TD Waterhouse. They've never asked me for a W-9 or issued a 1099-DIV or withheld tax on my RRSP.
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