I collapsed 2 LIRA's and my spouse 1 in 2012. The cost basis was less than market value when I moved to the US. I put the amount on line 16a of the 1040 and nothing on line 16b.
I classified these as general category income and claimed a foreign tax credit for taxes withheld on my NR4. I did about 10 hours of reading various forums and saw many, many conflicting opinions on how to classify and whether a foreign tax credit could be claimed. I noted some tax preparers doing the same thing I did above.
I looked at old returns done by an accountant and noted that for 2009 when I collapsed RRSP's there was no claim for foreign tac credit but I also noticed there were no NR4's in the file. I requested a meeting with my former accountant to discuss.
I would appreciate any comments on my approach.
LIRA Collapse 2012 - Foreign Tax Credit ?
Moderator: Mark T Serbinski CA CPA
Your LIRA is 100% taxable in US. It was a pension rollover, and as such has no investment basis.
So 16a and 16b should be the same.
I don't know of any tax preparer that would view a LIRA as non-taxable.
As to your previous RRSP collapse, this should have had an 1116 prepared (unless the tax was used as a deduction. If not you will need to amend that years return to add the foreign tax, and get some refund for that year, and carry forward any extra to this year, where it may help you cover your LIRA tax.
So 16a and 16b should be the same.
I don't know of any tax preparer that would view a LIRA as non-taxable.
As to your previous RRSP collapse, this should have had an 1116 prepared (unless the tax was used as a deduction. If not you will need to amend that years return to add the foreign tax, and get some refund for that year, and carry forward any extra to this year, where it may help you cover your LIRA tax.
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
if you do not have an NR4, this is not a big deal, you ahve the investment record, which would show a withdrawal and tax withheld. This has as much weigth as an NR4 in the IRS's eyes.
Your bigger problem is the mis-filing of your 2012 LIRA withdrawal.
Your bigger problem is the mis-filing of your 2012 LIRA withdrawal.
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
I'd be curious as to what other forums you are looking at. This is the definitive one -- especailly on US taxation of Cdn retirement accounts -- , and I'd like to see what (mis)information I'm fighting against.
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 makes sense, thanks kindly. So the RRSP contributions are not taxable, only the gain within the RRSP yet the LIRA's are fully taxable. The RRSP accounts went down in value since I moved to the US in 2006, ie cost basis was higher than market value. I also suppose I should have claimed capital losses for the LIRA and I didn't. Perhaps I will enlist your firm to help me sort out this mess :) I probably spent about 30 hours overall preparing my 2012 return, the result of working in high tech and not being an accountant ;) I will send you the links that confused me, later tonight.