I'm a US citizen/resident who cashed out my (mutual fund) RRSPs. Am I correct that the amount reported on Form 8891 line 7a is the total fund value at the time of redemption, and line 7b is this total, minus the value of the RRSP at the time I left Canada?
Re Form 1116 (foreign tax credit), is this catagorized as passive income? Also, does the amount entered on line 1a equal to 8891-7a or 8891-7b?
Recouping taxes from cashing out Canadian RRSPs
Moderator: Mark T Serbinski CA CPA
Your values for 7a and 7b are correct. these are then brought to 16a and 16b on 1040.
This income is "general limitation" income. the ammount of the income is 16b. You still use all the Cdn tax you paid toward the calculation. If done correctly, you may note that you get very little credit for the Cdn tax, and much of it is left to carry forward, which may not be useful. You should also run these same numbers, using the Cdn tax as a deduction on schedule A, to see which is best.
just an elaboration on how you determine 7b. If you were not a US citizen when you moved to US, the arrival BOOK value is the correct value. If however, you have always been a US citizen, then only the contributions you made to the RRSP are now tax exempt. You would need to go back an add all your contributions together, year by year in then current USD, to come up with your tax-exempt portion.
This income is "general limitation" income. the ammount of the income is 16b. You still use all the Cdn tax you paid toward the calculation. If done correctly, you may note that you get very little credit for the Cdn tax, and much of it is left to carry forward, which may not be useful. You should also run these same numbers, using the Cdn tax as a deduction on schedule A, to see which is best.
just an elaboration on how you determine 7b. If you were not a US citizen when you moved to US, the arrival BOOK value is the correct value. If however, you have always been a US citizen, then only the contributions you made to the RRSP are now tax exempt. You would need to go back an add all your contributions together, year by year in then current USD, to come up with your tax-exempt portion.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Your question leads me to think that you have always been a US citizen. As such, you should have known that your contributions would be tax-free on withdrawal, and should have been tracking these. After all, you were reporting these contributions as income on your 1040.
Have you not kept records of your RRSP contributions over the years? Failing finding these out, your other option is to simply make the entire RRSP taxable.
For US citizens, the book value of their RRSP when the returned to US has no bearing on the exemption. This applies only to non-citizens.
Have you not kept records of your RRSP contributions over the years? Failing finding these out, your other option is to simply make the entire RRSP taxable.
For US citizens, the book value of their RRSP when the returned to US has no bearing on the exemption. This applies only to non-citizens.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best