Guidance on Form 8938 with respoect to RRSPs

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taxeve
Posts: 23
Joined: Wed Jan 28, 2015 3:43 pm
Location: Montreal, Canada

Post by taxeve »

In the case of an RRIF, I'm going to call Investors Group to ask how they define themselves for the purpose Form 8938, Part VI, line 8a: 'Issuer' or 'Counterparty.' Just want to be sure. Will also call CRA.
For useful information from the IRS, here's the number:
IRS - International Section : 1-267-941-1000 , options (4) (4). They are very helpful and courteous. I've called them dozens of times for help with forms and ways to report. However, they are still unfamiliar with form 8938.
taxeve
Posts: 23
Joined: Wed Jan 28, 2015 3:43 pm
Location: Montreal, Canada

Post by taxeve »

[quote="voribo"]I think some of the problem using Part VI is that it does not fit RRSPs very well as RRSPs are financial accounts ( as is clearly called in the Fincens/FBARs) yet Part VI is for assets not held in a financial account..... go figure...see:

Part VI. Detailed Information for
each "Other Foreign Asset"
Included in Part II Summary
Use Part VI to report information for
specified foreign financial assets not
held in a financial account

I still have a few months to finalize how to fill out the form.[/quote]

i'm wondering, does RRSP also get reported in Part I and Part V as a Custodial Account (as well as Part VI)?
pz
Posts: 1
Joined: Sun Mar 29, 2015 7:56 pm

8938 for less than minimum but with RRSPs

Post by pz »

Hi there, I have accounts in Canada whose value in 2014 totalled less than the $200k/$300k threshold. However most of the amount is in RRSPs. In the past I have filed 8891 to ensure that the income in these accounts is not taxable in the US. However, I can longer do this as the 8891 no longer exists. Do I need to file an 8938 to ensure that the income in these accounts is not taxable even though I don't meet the $200k/$300k threshold?
taxeve
Posts: 23
Joined: Wed Jan 28, 2015 3:43 pm
Location: Montreal, Canada

Post by taxeve »

Reply to PZ:
Not to sure about this. Best to check the on-line Instructions for the 8938. Also good idea to call the IRS International Section, telephone (267) 441-1000, options (4), (4). They will try to help. Try to call them early in the day before there is a longer wait time to speak to an agent.
rbsullivan
Posts: 7
Joined: Fri Feb 04, 2005 10:16 pm

Post by rbsullivan »

I kind of been skimming this topic, but not really paying attention as I don't meet the 8938 thresholds. With the elimination of form 8891, it appears that I do not repport my RRSP at all anymore (except for the FBAR part). Is this the case?
nelsona
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Location: Nowhere, man

Post by nelsona »

If you are below 8938 threshold, then only FBAR comes into play (and answers on bottom of scheduleB).
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
dimancea
Posts: 26
Joined: Thu Oct 28, 2004 6:35 pm

Post by dimancea »

rafa02,

You said you are using TaxAct and so do I. For 2013 their 8891 form was linked to 1040 and my RRIF distribution were automatically entered on 1040, line 15b, I believe. Do you know what is the right way to enter it now, that 8891 has been eliminated?
Thanks
rafa02
Posts: 86
Joined: Sat May 26, 2012 3:18 pm

Post by rafa02 »

Not certain I did it the "right"way, but I filled out a "Foreign Employer Compensation and Pensions" form. There are different ways to access this form, but I think the easiest way is to select the 1040 form and go to line 16a, left click on the folder icon and it will give the option to add a copy of the form. Once completed the correct amounts were included on line 16a and 16b.
nelsona
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Location: Nowhere, man

Post by nelsona »

raf02 is correct. RRSP income has always gone on 16a an b, not 15, before during and after the 8891 era.

In taxact the Foreign employer compensation method is the correct method.
I believe this also correctly initiates the 1116, but even if it odesn't, you are halfway there.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
dimancea
Posts: 26
Joined: Thu Oct 28, 2004 6:35 pm

Post by dimancea »

Thak you raf02. I received the following response from Tax Act customer service to my query:

To enter the retirement income on the worksheet:
From within your TaxACT return (Online or Desktop), click on the Federal Q&A tab
Click Retirement Plan Income to expand the category, then click Foreign Pension Distributions
Click Add to create a new copy of the form or click Review to review a form already created
The program will proceed with the interview questions for you to enter or review the retirement income information. The actual amounts would be entered on the screen titled Foreign Employer Compensation and Pensions - Compensation or Pension.

The FEC worksheet is not an IRS form, but is a worksheet only in the TaxACT program used to collect the information and transfer it to the appropriate place on the return. All information entered on the worksheet is transmitted with the return if it is electronically filed. If the return is paper filed, there is no documentation required to be sent with the return. The IRS will contact the taxpayer if they need any additional information on the amount entered on the return for foreign retirement income. If you would still like to print the FEC worksheet to mail with the return, the following steps will allow you to do that.
Filo
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Joined: Tue Mar 20, 2012 2:09 am
Location: Canada
Contact:

Post by Filo »

(1) MGeorge and K104XYZ have said that in 8938 Part VI Line 8b they specified "Corporation", not "Trust". That would certainly make Schedule B easier: for the last several decades I have owned RRSPs or an RRIF but marked Sch B Line 8 = "No", and I would certainly not like to abruptly switch at this point. In actual fact, how much trouble can I really get in by specifying "Corporation"?

(2) But if I were to make 8938 Part VI Line 8b = "Trust", then I would have to make Sch B Line 8 = "Yes" all of a sudden. I know Rev Proc 2014-55 says that RRIF holders do not have to file 3520 for the RRIF. But would I need to submit an *attachment* to Sch B stating that the Trust is an RRIF and is exempt from 3520 because of RP 2014-55?
skoper
Posts: 38
Joined: Wed Aug 26, 2009 9:15 pm

Post by skoper »

Hi, are LIRAs to be treated as RRSPs with respect to new 8938 reporting requirements?
nelsona
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Location: Nowhere, man

Post by nelsona »

Exactly like RRSPs
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
K104XYZ
Posts: 18
Joined: Sun May 18, 2014 11:05 am
Location: Calgary AB

Post by K104XYZ »

Filo, re your post of April 14 …

Please allow me to clarify … yes, MGeorge and I said that for Line 8b in Part VI of Form 8938 we specified “corporationâ€￾ and not “trustâ€￾.

What we said there, was that the RRSP plan custodian (the “issuerâ€￾), the name of which was reported on Line 8a above the “issuerâ€￾ check box, was a “corporationâ€￾ … we did not say that the RRSP was a “corporationâ€￾.

RRSPs are still “foreign trustsâ€￾ for IRS purposes …

Your post confuses the reporting on Line 8b in Part VI of Form 8938 with what should be reported on Line 8 of Schedule B, but these are different concepts. Please read carefully what we said about Line 8b of Part VI of Form 8938.

But, on the subject of Line 8 of Schedule B … you don’t necessarily have to change your past practice … depends on what advice you want to take on this.

You say that you have always (for several decades) marked Line 8 on Schedule B as “NOâ€￾ even though you owned an RRSP or RRIF. Most comments that have ever been posted about this would disagree with that, including just about everything that has ever been said about it in this forum, and in virtually every other tax practitioner’s on-line post … most everybody says that you must mark Line 8 on Schedule B as “YESâ€￾ if you own an RRSP or RRIF, because an RRSP/RRIF is a “foreign trustâ€￾, and thus the answer is (literally) that “YESâ€￾ you own a “foreign trustâ€￾.

Notwithstanding that, I personally have also always shown “NOâ€￾ on Line 8 of Schedule B, even though I owned RRSPs and previously submitted Forms 8891 which clearly showed that I owned RRSPs (“foreign trustsâ€￾) – so I actually have always done what you say you have always done. I twice sent in a written question to the IRS on this, and I twice received a written response from the IRS (Email Tax Law Assistance) that told me to say “NOâ€￾ on Line 8 of Schedule B if the only “foreign trustâ€￾ that I had was an RRSP – what they said was that I should check “YESâ€￾ on Line 8 of Schedule B “ONLY IFâ€￾ there was a “foreign trustâ€￾ that was reportable on Form 3520, and that I should check “NOâ€￾ if I did not have a “foreign trustâ€￾ that was reportable on Form 3520. So that is why I have always checked “NOâ€￾ on Line 8 of Schedule B, even though I held RRSP “foreign trustsâ€￾ for every year that I have ever filed – and I have never had a problem with that.

But, like I said, most people would not agree with that – but it does provide an opening for you to continue doing what you always did.

However, again, please look carefully at what we said about “corporationâ€￾ versus “trustâ€￾ on Line 8b in Part VI of Form 8938 and don’t confuse that with what should be reported on Schedule B …
nelsona
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Location: Nowhere, man

Post by nelsona »

Not a make or break issue, but...

Line 8 on schedule is is not dependant on whether you need to file 3520 or not. It simply asks if you have a foreign trust.

It THEN says you MAY need to file 3520.

RRSPs are a foreign trust, and still are. In fact until 2014, they were indeed a foreign trust requiring 3520 treatment. 8891 merely acted to SUBSTITUTE in place of 3520. Only in 2014 was it stipulated that RRSPs did NOT require 3520.

But they are still a foreign trust.

i don't mneed to tell you about IRS responses. their reasoning in their response in your case was plain wrong. Question 8 doesn't ask if you have a 3520-reportable foreign trust?

But at least you would have something to go back to should there be a review of your files.

I prefer to take a consistent apprach, particularly since ansrwering YES does not force you into any particular course of action.

just my opinion.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
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