8891 and 1040X for the 1040NR??

1canuck · Post by **1canuck** » Fri Jan 25, 2008 2:16 pm

RRSP question:

Here is my situation:

Please correct me in case I am doing something wrong.

I had an RRSP GIC since 2003 (Balance is leass than $10K since the start date). I entered US in mid 2004. I have filed the tax returns as follows:
(ALL without the 8891s, since I did not know about this requirement):

2004 -- 1040 NR and
2005, 2006 -- regular 1040s.

Now I plan to ammend the tax returns for 2005 and 2006, by mailing ONLY:
the 1040X (2005 and 2006) along with the 8891s for each.

Since there are no changes in my tax, income or refund, I will leave the 3 columns blank and add a note saying that "no change in taxes, income or status. Adding 8891 ONLY".

What about the year 2004 though? Since I filed the 1040NR for 2004, which
is only about the income I earned in the US, should I include 1040X for year 2004 as well?

Because I came in Aug 2004 and I must be having some interest accrued from Sept. to Dec 2004. (I do not have the statement for these 3 months, but I can prove that the interest is less than C$70). Is this a US sourced income (since I was living in the US at that time)? If yes, what should be done regarding 1040X for 2004?

I plan to include the cover letter as well.. should I request a tax deferral since 2004 (by filing 1040X for 2004) or should I request it since 2005 and not worry about filing the 1040X for the year 2004?

Please help..

nelsona · Post by **nelsona** » Fri Jan 25, 2008 3:17 pm

Since a 1040NR implies that you are not reporting foreign income, then your RRSP income is not yet subject to US tax and thus no election was required, nor was there a need to file 8891.

Your deferral begins with the 2005 tax year (you would indicate this on your 8891).

Your basis for determining future tax-free withdrawals will be the BOOK value of your RRSP on Jan 1, 2005.

1canuck · Post by **1canuck** » Fri Jan 25, 2008 3:45 pm

[quote="nelsona"]Since a 1040NR implies that you are not reporting foreign income, then your RRSP income is not yet subject to US tax and thus no election was required, nor was there a need to file 8891.

Your deferral begins with the 2005 tax year (you would indicate this on your 8891).

Your basis for determining future tax-free withdrawals will be the BOOK value of your RRSP on Jan 1, 2005.[/quote]

Thanks Nelson, I will ammend only 2005 and 2006 returns.

Also, regarding the book value: Since my RRSP is a GIC (just cash - not invested in any fund/stock), its book value will be the cash value of the GIC on Jan 1, 2005, right?

nelsona · Post by **nelsona** » Fri Jan 25, 2008 4:42 pm

1canuck · Post by **1canuck** » Fri Jan 25, 2008 5:48 pm

[quote="nelsona"]Yes.[/quote]

Last question:

Since I have not collapsed my RRSP yet, the lines 7a and 7b of the 8891 will be "$0", am I right? Or do I have to write the interest amount that was accumulated, but never received? (stayed within the RRSP).

Gee, this is far tidious than I previously thought!

nelsona · Post by **nelsona** » Fri Jan 25, 2008 9:05 pm

You have nothing to report

cullen · Post by **cullen** » Sat Jan 26, 2008 2:06 pm

If you are in CA and file a return as a non resident there, you will have to report RRSP earnings as a part of total worldwide income. If you files a as a CA resident, the RRSP earnings are taxable

nelsona · Post by **nelsona** » Sat Jan 26, 2008 4:19 pm

Cullen, since california is the only state that has this issue, there is no need to muddy the waters.

Filing a 1040NR absolves one of any need to begin filing 8891.

1canuck · Post by **1canuck** » Mon Jan 28, 2008 2:11 pm

Thanks guys. I was not in CA when I filed the 1040NR in 2004. I started filing the normal 1040 (as a resident) since 2005 and hence will be filing the 8891s for 2005 onwards.