Form 8891 questions here please!!!!

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

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

Post by nelsona »

Yes.

IRS requires (since 2003) that the mere existence of RRSPs be reported to them, since they are by definition a foreign trust. They have said that starting this year this should be done on Form 8891. Your other choice is to file 3520 and/or 3520-A. When you look at these, you will quickly choose to file 8891.


If you are not yet electing to defer taxation (by the fact that no income has been generated in your account), you indicate this simply by not making the election (answer 'no' to 6a and do not check 6c) and recording '0' in the spaces for line 10.

The first time you generate any income in your account, you will most likely then want to make the election, and then , although the election will be in effect for all future years, you will simply resubmit new 8891s every year, reaffirming this and reporting the yeart-end balance.



<i>nelsona non grata... and non pro</i>
flames9
Posts: 50
Joined: Fri Apr 08, 2005 9:00 am

Post by flames9 »

Hello. I hurriedly posted a topic without doing a proper search, very sorry.!!! Little about me--I'm a Canadian citizen, now living permanently in USA with my American Wife, here on a CR-1 Visa. Arrived here in USA on Dec 17 2004.

So after reading this great forum I have come to the conclusion that I have to report my Canadian RRSP's and should do that on form 8891. How exactly do I list that on the form? I assume that i am the "beneficiary" 2004 will be my first year in USA so 6a would be NO, and would CHECK the box on 6c.

On 7a I assume I would put in the amount that was in the account on dec 31 2004?? and line 7b would be ZERO since I didnt take anything out.
For line 8 I would put in the same amount as 7a (account balance) and that would be it for me!! Just put in ZEROES from 9 to 10e?

Agian, I have never put in money in this account in 2004, it has just accrued interest. I have added money to it on MArch 01 2005 from my return of contributions from the Canadian Armed Forces ( they deposited it directly to the account)

This is an excellent site. Any help would be greatly appreciated. Again sorry fore posting earlier on the wrong forum Cheers Scott
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

If you read the thread, there is nothing to 'assume'.


7a and b is to report withdrawals. Since you had none, you write nothing theer.

8 is for year end balance, in USD.

Since you are filing a paper return, I would simply add it now. It affects nothing on anything previously done by the preparer, and finishes the job.


Did JH not include anything for your RRSPs[?]What about any treaty position form 8833[?] given that you excluded foreign earned income, while not being a US citizen. What about foreign tax credits for your Cdn non-wages[?]

Not saying that they did anything wrong (except not filing RRSP), just a warning that US 'preparers' often just treat you like a US citizen, which you are not.


<i>nelsona non grata... and non pro</i>
flames9
Posts: 50
Joined: Fri Apr 08, 2005 9:00 am

Post by flames9 »

Thanks for the reply. Its all sorted out and can mail off the taxes tomorrow. The fellow at Hewittjackson had never heard of the form 8891, neither had the guy at H&R Block. Thanks again. Scott
jade
Posts: 10
Joined: Mon Mar 28, 2005 11:30 am

Post by jade »

Hi,

Besides 8891, where else do we need to report RRSP? Do we need to report RRSP on Form TD F 90-22.1? Or is Form TD F 90-22.1 only for ordinary bank accounts?

Is it true that if one needs to file Form TD F 90-22.1, one has to fill out Schedule B of 1040 as well? If so, do you send Schedule B together with 1040 or Form TD F 90-22.1?

Thanks a lot!
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You need to file sched b with your 1040 -- even if you don't have interest -- if you have foreign accounts (to check the boxes at the bottom). If you had any interest (excluding RRSP) then you have to file Sched B anyways.

You file the TD form for all your foreign accounts (including RRSPs and brokerage accounts) if the total holdings
EVER was over $10K in 2004.



<i>nelsona non grata... and non pro</i>
MaggieA
Posts: 150
Joined: Sun Oct 31, 2004 4:06 pm

Post by MaggieA »

I'd be interested in knowledgeable comment on the assertions here:

http://groups.yahoo.com/group/canada_tw ... ssage/9881

Linked message is longish, but essentially it says that if you've had a rollover between RRSPs, then in addition to form 8891 you have to submit the transferor and transferee elections specified by Rev Proc 2002-23 every year.

I myself had a rollover coincident with my 2002 Canada-to-US move. Was required to close my group RRSP when I ceased being an employee of the Canadian unit of my firm. Rolled it into my personal RRSP and dutifully reported the rollover according to Rev Proc 2002-23 stipulations on 2002 and 2003 taxes.

I presumed that 8891 ended my requirement for special reporting on this item. I'm a bit incredulous at the above-linked message. I don't have a problem with full disclosure, but how much paperwork concerning my RRSP can the IRS really want?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Yes, I read this, and am taking the following position:

If you have already submitted documentation regarding transferor/transferee acounts, then there is no need to continue to do so, as the instructions on 8891 indicate that elections made on previous accounts apply to subsequent new ones as well.

There is clearly no tax liability for failing to repeatedly submit these old statements, since the election has been made and is irrevovcable, and there is no penalty for not submitting them.

The only penalties assocuitaed with any of this is failure to make a yearly trust statement on one's CURRENT accounts, and this is covered with 8891 on each CURRENT account.


IRS' stated goal with 8891 was to SIMPLIFY matters related to RRSPs, therefore it was not their intent (regardless of what Yates might have said before publishing the final instructions) of needing to file MORE paper than under RP 02-23.

If one made a transfer in 2004 or later, one *probably* should comply with RP 02-23 for that year ONLY.

Once IRS has a copy of any transferee/transferor documents for my old accounts, that's sufficient. If they want more copies, they can ask me for them, or print one from their archive.





<i>nelsona non grata... and non pro</i>
MaggieA
Posts: 150
Joined: Sun Oct 31, 2004 4:06 pm

Post by MaggieA »

Thanks. Phew, that seems so <i>reasonable.</i> (Not always the case with taxation issues!)
ldmone
Posts: 5
Joined: Mon Apr 11, 2005 8:46 pm

Post by ldmone »

My husband and I have been in US for 5 years and I thought I had reported all my Canadian investments correctly. Now I realize that we had been treating my husband's Registered Pension Plan as an RRSP and filing 89-45 and 2002-23's in 2000, 2001, 2002, 2003 and 2004. What should I have been filing for these years? How should I proceed?
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Just as an added comment on the supposed need to perpetually include RP 02-23 statements for RRSP 'transfers'.

When Yates was asked about this requirement, he was reportedly unfsmiliar with it, and only after consulting with his underlings was the 'need' to continually file this papers made known to him.

This further illustrates that 8891 was supposed to reduce paperwork, but the that Yates simply forgot some of the paperwork he was trying to eliminate.

I am thus considering my not filing the transfer documents as helping him in his stated goal.



<i>nelsona non grata... and non pro</i>
LastMinuteFiler
Posts: 8
Joined: Mon Apr 11, 2005 12:35 pm

Post by LastMinuteFiler »

Re line 6b of Form 8891, if 2002 was the first year an election was made under Rev Pr 02-23 but you also filed amendments going back to 1997, is the first year the election came into effect 2002 or is it 1997?
resourcemom
Posts: 1
Joined: Thu Apr 14, 2005 6:14 pm

Post by resourcemom »

I've been filing Rev Proc 89-45 for my RRSP every year for myself and my husband since we moved to the US in 1995. I understand how to fill in form 8891 for the RRSPs for 2004 taxes and to send it with a 1040X after I receive my refund and that we must complete one form 8891 for each RRSP. (form 8891 responsed will be 5=Beneficiary,6a=no,6b=2004,6c-check box,7a blank,7b blank, 8=year end US$ value),

My Dilema -- I also have an RPP (registered pension plan) in Canada that I never filed Rev Proc 89-45 for since that did not seem to apply to RPP plans (no reporting to IRS at all on RPP). (I only just now found out about Rev Proc 2002-23 and form 8891 for 2004). All my contributions to the RPP were made in 1995 or prior while I was Canadian living in Canada. The Rev Proc 2002-23 seems to apply to RPPs also, the wording in Section 2.03 lists "registered pension plans"; however form 8891 does not have a choice for RPP in section 4 (although form 8891 instructions allude to
Article XVIII(7) and a Canadian "pension"). My old employer is collapsing the RPP so I must rollover the funds into a LOCKED in RRSP this year.

Will the LOCKED in RRSP require a form 8891 next year for 2005 returns? If so should I do a form 8891 this year for the RPP and check box 6c, taking the election which will transfer to the locked in RRSP? On the 8891 for 2004 for the RPP - what do I fill for section 4 since RPP is NOT a choice?

Have I been mistaken about Rev Proc not applying to RPPs -- do I need to back file any rev procs for my RPP (if yes how far back and which rev proc)?

Your site is awesome with very clear advice, thanks,
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

8891 is for RRSP/RRIF/LIRA/LIF ONLY.

RPP are covered by Rev Proc 2002-23.

One is *supposed* to file an RP 02-23 statement for each RPP they have, since 2002.

If you convert your RPP to a LIRA, then you will file an 8891 for that new account, at that time.

<i>nelsona non grata... and non pro</i>
LastMinuteFiler
Posts: 8
Joined: Mon Apr 11, 2005 12:35 pm

Post by LastMinuteFiler »

Nelson, how about an answer to my question of April 13
Post Reply