Tax implications for Non Resident purchasing RRSP's

[Sammi]

Hello,

We pretty much got up and moved from Canada to USA with no preparation and were very disorganized. We decided to pay back the HBP and were too late (missed the deadline by a few months). So this is a 2 part question:

1) I understand that we must include the full amount of the HBP that we did not pay back on time in our Canadian tax return. Can I still take the deduction for the RRSP that we purchased in 2014 and apply it against this income for a net owing of zero ?

2) What are the tax consequences from IRS point of view and the state of California for purchasing an RRSP while being a resident of USA? For the federal tax return can I defer the tax ? From the state of California's perspective, do I include only income earned on the RRSP's in 2014? Can we agree that in both cases we do not include the principal amount of the investment, just the gain? I don't think there is a deduction for RRSP against US income?

Thank you,

[nelsona]

1. Did you not repay the HBP or did you pay it too late? If you paid it late and has suffcient RRSP contribution room, then of course, you should deduct thecontribution from your Cdn taxes when doing your final Cdn return.

2. the contribution you made in canada is not deductible against US taxes. However, for federal purposes, it adds to your "investemnt" in the account, along with the book value your RRSP had when you move. I don't see any point in making any further RRSP contributions at this point. Put you money in US retirement vehicles, and in your US home.

For cali purposes, the acount is NOT a shetered account, so you simply treat it like any other investment account, paying year-by-year the tax on the internal income like dividend and interst dirstributions, as well as any gains from swapping investments inside the account.

I assume you are dealing with a Cdn firm that allows themslves to have US clients. You must not pretend to be in canada for this purpose.