yet another rrsp ?
Moderator: Mark T Serbinski CA CPA
yet another rrsp ?
I know that the RRSP deferral issue has been vastly covered and I have tried to read and understand it. My inability to do so is just another indication of my total financial illiteracy. Here is another example...I moved to the US in 1998 and have been here ever since. I have an RRSP (CIBC GIC) with probably less than $5,000. I have never reported it in any form to the IRS. I would likely have gone on ignoring it for 10 more years but I want to cash it out. I understand that doing so will trigger something with the IRS unless I take some action. I understand sending in the 8891 for the last 6 years (yet have no idea where to get the information to fill it out since I retained no statements) to elect to defer taxation on accounts for which they have no record. Do I need to send in amended 1040s? Is this a redeemable situation? I would just as soon crawl back into my hole of denial of the issue but I could use the money right now. I need a rope.
Your understanding is correct.
6 years of 8891 by ammending each return. Then in the year you collapse it, you report the entire withdrawal as gross annuity income (16a on 1040) and the growth since 1998 as taxable income (16b).
You need to determine as best possible thte value (in 1998 US dollars) of your RRSP when you moved to US. The entire proceeds minus this number will be what you owe US tax on.
You can then use the Cdn tax you pay (25% -- or less if you make the 217 election) as either a deduction on schedule A, or use that ammoun to calculate a foreign tax credit on Form 1116.
6 years of 8891 by ammending each return. Then in the year you collapse it, you report the entire withdrawal as gross annuity income (16a on 1040) and the growth since 1998 as taxable income (16b).
You need to determine as best possible thte value (in 1998 US dollars) of your RRSP when you moved to US. The entire proceeds minus this number will be what you owe US tax on.
You can then use the Cdn tax you pay (25% -- or less if you make the 217 election) as either a deduction on schedule A, or use that ammoun to calculate a foreign tax credit on Form 1116.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Thanks for the tip but if I had the money to spend on professional services, I wouldn't need to cash out. Besides, after reading his immigration related posts for 10 years, I'd rather get Nelson's spin on it first. And back to that...I do a 1040x with 8891 for each of the six years and I should be good to go? Have you heard of any cases where the IRS did not forgive and forget? I found a statement from 1998 and the GIC was worth $2200. I doubt its worth much more now so I am not sure cashing out is worth the hassle but I should catch up on the paperwork anyway.
1040-X for each year.
$2200 was about $1700US back then.
As to the hassles, your RRSP is too small to keep, quite frankly, as the hassles of keeping it are more than thoise of cashing it in.
Should jhve done this 9 years ago.
$2200 was about $1700US back then.
As to the hassles, your RRSP is too small to keep, quite frankly, as the hassles of keeping it are more than thoise of cashing it in.
Should jhve done this 9 years ago.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing