CESG grants taxable by IRS?

dave23100 · Post by **dave23100** » Thu Apr 18, 2013 2:27 pm

Are the CESG grants that called income by the IRS, or not? If yes, it would be somewhat useless to have a RESP for my kids

Thanks

nelsona · Post by **nelsona** » Thu Apr 18, 2013 3:56 pm

They are not taxable in US, until the child takes the income, like in Canada.

nelsona · Post by **nelsona** » Thu Apr 18, 2013 4:04 pm

Sorry, checked with my sources, (BDO) and the grant IS indeed taxable.

http://www.bdo.ca/en/Library/Services/T ... Canada.pdf

dave23100 · Post by **dave23100** » Mon Apr 22, 2013 9:38 pm

Thanks for checking-- do you think the BDO checked that out with the IRS, or is that just their opinion?

Thanks

nelsona · Post by **nelsona** » Tue Apr 23, 2013 9:45 am

BDO doesn't just spew out off the cuff information under its masthead.

Sylvia · Post by **Sylvia** » Mon May 27, 2013 11:13 am

I've been reading all the RESP threads but I'm still a bit confused by something.

From what I've read so far, because RESPs are grantor trusts, if U.S. citizen parent was a subscriber, they would have to report the CESG/CLB and all dividends/interest for the year to the IRS.

However, it also appears as though a beneficiary who is also a U.S. citizen would also have to file for the annual amounts they withdraw once they attend school? Hasn't all the income already been taxed in the U.S. parent's hands years ago?

nelsona · Post by **nelsona** » Mon May 27, 2013 4:37 pm

Yes... and so? Capital gains tax is tax on money that was already taxed.

No one says that money can only be taxed once.

Sylvia · Post by **Sylvia** » Mon May 27, 2013 5:23 pm

You're absolutely right, now that I think of it. There's a perverse logic to RESP double taxation considering the phenomenon of estate taxes.

You have a real gift for making the confusing suddenly obvious :) I enjoy your posts.