Form 8891 questions here please!!!!

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Mowog
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Post by Mowog »

Do I need to file an 8891 for each and every RRSP that I hold in Canada?
nelsona
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Post by nelsona »

Yes.

Each and every one whether or not you wish to defer US taxation on its generated income.

Most people moving to US (or US citizens living in Canada) try to consolidate into 1 or 2 accounts.

If you are filing 1040 on paper, there is no need to wait to send 8891. Only if you e-file do you need to do this.

And, yes, you should be updating ALL your previous returns with 2002-23 statements (not form 8891), or you are liable for tax in those years.

<i>nelsona non grata... and non pro</i>
orillia4
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Post by orillia4 »

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote"><i>Originally posted by nelsona</i>

The 8891 form states that the year to put is the fist year you elected 02-23, regardless of what you did previously.


<i>nelsona non grata... and non pro</i>
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

When did the Rev Proc 02-23 take effect? I have declared RRSP's with other statements since 1991? Should people report the first year they started reporting no matter what Rev Proc was in eefect at that time?
nelsona
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Post by nelsona »

The instructions clearly state that even if you used 'other' elections in the past (even RP 89-45), they are not equivalent to RP 02-23 (which obviously came into effect in 2002).


Your answers to question 6(a) is 'No', and thus you should check box on 6(c).

Hoeever, The fact that you filed 'something' for past years is sufficient for you to avoid having to back file for past year. You have safely deferred taxation for all those years.

Had you not filed anything, I would be suggesting that you back-file the RP 02-23 statements for 6 years, and then indicating 'yes' and 1998 has your first election year.


<i>nelsona non grata... and non pro</i>
bruce
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Post by bruce »

These procedures are making my head spin and I very much appreciate any advice on my situation.

I am a US citizen that moved from Canada to the US in 1998. Beginning that year and every subsequent year (98-03), I filed form 8833 with my return stating that pursuant to Article XVIII, "I am deferring $X of ordinary income and $Y in capital gains earned in my Canadian RRSPs." I have never filed any 02-23 statements (and did not learn about it today).

I am prepared to file the new form 8891 for 2004 but need advice on how to handle prior years:

- Do I need to file any amendments to prior years or does my consistent filing of the 8833 cover me? (I read elsewhere on this board that the 8833 is not "ideal", but I'm not sure what that meant.)

- If I need to file amendments for prior years, is it just for 2002 and 2003 (using 02-23 statements) or is there also something I need to do for 1998-2001?

- On the 8891, how should I answer questions 6a, 6b, and 6c? I'm guessing the answer depends on whether I need to file amendments??? I'm not sure if answer to 6b would be 1998 (my first year deferring) or 2002 (with amendment with 02-23 statement). Or, is it possible that have need to check box 6c?

Thank you so much for your help!!!!

nelsona
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Post by nelsona »

As I pointed out in the post just above yours, the 8833 stsements ae 'sufficient' to cover your past years.

2004 will be the first year you avail yourself of RP 2002-23, so that is what you indicate.

File 8891 exactly like I told the previous poster 6(a) NO, 6(c) check

<i>nelsona non grata... and non pro</i>
orillia4
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Post by orillia4 »

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote"><i>Originally posted by nelsona</i>

The instructions clearly state that even if you used 'other' elections in the past (even RP 89-45), they are not equivalent to RP 02-23 (which obviously came into effect in 2002).


Your answers to question 6(a) is 'No', and thus you should check box on 6(c).

Hoeever, The fact that you filed 'something' for past years is sufficient for you to avoid having to back file for past year. You have safely deferred taxation for all those years.

Had you not filed anything, I would be suggesting that you back-file the RP 02-23 statements for 6 years, and then indicating 'yes' and 1998 has your first election year.


<i>nelsona non grata... and non pro</i>
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">


Thanks!

One more clarification: On my previous elections I made the following statement "I hereby elect under Article XVIII (7) of the 1996 (as amended) Canada - U.S. Income tax convention to defer U.S. taxation on income im my Canadian RRSP. I have not made any reference to Rev. Proc. 02-23 (literally). Should I assume then that I did not comply with the 2002 procedure? The title on my documents read "Treaty-Based Position Disclosure Under Section 6114". I also referenced Internal Revenue Code Section 61(a)(4).

dacrosby
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Post by dacrosby »

Nelson, could you please clarify whether one needs to enter a comment on Part II of 1040X when sending this form along with form 8891? It seems like you should provide some explanation as to why you are filing 1040X, but Part II specifically states that it is for an explanation of changes to <i>Income, Deductions, and Credits</i>, not for explaining additional forms. Thanks!
nelsona
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Post by nelsona »

I simply state that I am submitting 1040-X to attach form 8891 (or, in the past statements related to RP 02-23 or 89-45).

I add that I am not changing any income, deductions or crdits (which is obvious from the front page full of zeroes.

This is not complicated.

<i>nelsona non grata... and non pro</i>
jadrake
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Post by jadrake »

So I decided to work on my 8891 today and had a few questions for the thread....

My case (like many Canadians who are working in the US) is such that I am not receiving a distribution from my RRSP. I am a little unclear on what the purpose of and how to report on sections 10 of the 8891. In my case, I reported my year-end balance of $XXXX USD in box 8. During the year, my RRSP account sold some stock for a capital gain, earned some dividends and a tiny bit of interest.

Am I correct in that in line 10a, b, c and d we are supposed to claim this interest, dividends and captial gains on our 1040? Or is this only if those dividends and interest are paid to us outside the RRSP (ie. to some brokerage account? - therefore acting as a distribution) This would seem to defeat the purpose of tax-deferring the account wouldn't it? I mean if I have to claim what I made in the RRSP then how am I deferring it?

Previously in my 2002-23 (I have filed them since 2002) and then the older forms before this - I simply claimed the before and after thus you were deferring any gains in the account.

Thanks for helping to clarify this.

-Jason
nelsona
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Post by nelsona »

Line 10 is only for those who are NOT electing to defer income.

This is quite clear in the instructions.

<i>nelsona non grata... and non pro</i>
DallasBill
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Post by DallasBill »

Nelson... I have filed the old Rev-Proc 89-45 every year since 1995 and the new 2002-23 in 2002 and in 2003. So, in reading here, I am confused.

I know I am a 'beneficiary' in 5.
I know I say 'Yes' to 6a.
Do I enter '2002' in 6b? That's what <b>I think</b> I see here, but...

Instructions for 6 say:
"If an election (other than an election under Rec-Proc 89-45) was made for an RRSP, <b>and</b> amounts from the RRSP were rolled over tax-free to a RRIF or RRSP, the election is consdiered to have been made for the plan which received the tax-free rollover"

That statment makes no sense to me. I, and many others, have had the same 2 RRSP plans all along. Nothing has rolled over to another RRSP -- the only thing that's <b>ever</b> changed is a plan company name due to mergers in Canada.

So, given that, what year <b>now</b> goes in 6b? Still 2002, the first 2002-23 year, or...??

Thanks!

...Bill
nelsona
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Post by nelsona »

That line in the instructions applies only to rollovers.

The answer to 6b is the first year you elected with RP 02-23 on <i>this </i> account (that's right on line 6b), or IF this account is a rollover, the first year you elected on the <i>original </i> account.

Its just IRS-ese for saying once you make a proper election with RP 02-23 on an RRSP, it applies to all future 'children' of that account.

<i>nelsona non grata... and non pro</i>
DallasBill
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Post by DallasBill »

Got it... that's 2002 for both of them, as neither is a roll-over and both were first elected via the new RP 02-23 back then.

Cheers!!

...Bill
bigricardo
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Post by bigricardo »

Hi,

I know that this topic has been thoroughly covered, but I have one simple question.

If I have an RRSP full of stip bonds and stocks that have not been sold (ie. no dividends or capital gains yet), do I have to do any of this? Do I only have to do this in years that I sell stock?



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