I recently became aware that in order to avoid having to pay US tax on the undistributed income in my RRSPs I should have been filing appropriate elections under Article XVIII(7) of the Tax Treaty since I took up residence in the US. KPMG neglected to inform me of this requirement when they did my 1st US Tax Return.
I assume I will need to file 1040X and F8891 (or its earlier equivalent) for each year I did not make the election. My question is: how far back do I need to file amendments ? I have seen some suggestions that I would need to go back to the year I moved to the US and some that 6 years back would suffice.
Is there a procedure for explaining the situation to the IRS & requesting that they "back-date" the elections ?
RRSP Undistributed Income reporting
Moderator: Mark T Serbinski CA CPA
The rule of thumb is six years, and coincides with the directions in IRS Rev proc 2002-23.
You simply submit 6 1040-X for 2003-8 mentionning that you are only adding Form 8891 (one for each account) for each year. No chnage in income credits or deductions.
On the 8891s for 2003, you indicate 'no' on 6a, and check 6c. since that this is the first year you are electing to defer, and then indicate yes for 6a and indicate '2003' on 6b for the others. You are always the beneficiary for line 5.
The only other piece of info you will need to supply (assuming you made no RRSP withdrawls during that time) is the year-end value on line 8 (in USD value at end of those years).
You simply submit 6 1040-X for 2003-8 mentionning that you are only adding Form 8891 (one for each account) for each year. No chnage in income credits or deductions.
On the 8891s for 2003, you indicate 'no' on 6a, and check 6c. since that this is the first year you are electing to defer, and then indicate yes for 6a and indicate '2003' on 6b for the others. You are always the beneficiary for line 5.
The only other piece of info you will need to supply (assuming you made no RRSP withdrawls during that time) is the year-end value on line 8 (in USD value at end of those years).
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
This is a good topic as I am in the same situation. I too recently learned about the Form 8891 and had been advised by several sources to file retroactively for the past years. I am in the process of filling these forms out but I have hit a snag and am wondering if anyone can provide some help.
I have had different RRSP accounts at various times over the past years. Assets have been transferred (tax-deferred) from one RRSP account to another on 4 occasions. I am wondering in regards to Line 7a and 7b on Form 8891, whether these types of transfers would be considered "Distributions received from the plan". Technically, i didn't receive anything because i didn't withdraw. these were transfers.
But in doing some research, it appears that the value entered on Form 8891 line 7a and 7b would be entered on Form 1040 line 16a and 16b. And the 1040 instructions discuss about rollovers from a qualified plan to another. it also refers to Pub 575 which mentions about a "direct rollover option" that sounds very much like the tax deferred transfer of RRSP assets from one account to another. so based on this, my understanding would be in a year that the RRSP assets were transferred, i would enter the transfer amount on Line 7a (as it was not taxable) and then enter $0.00 as the end of year balance on Line 8. And for the new RRSP (transferee), i would file a separate Form 8891 only disclosing the year end balance on Line 8 and not have to enter the contribution amount (from the old RRSP) on Line 9 because I would be electing to defer taxing so I can skip the rest of the form after Line 8.
For the new RRSP, my undertstanding is despite the assets being the same, would I have to make a new election on 8891 to defer taxing and not carryover the old deferral year from the previous account because these are different accounts?
Also, a side question regarding dividends reinvested in the plan. Would these be considered as "Distributions Received" for purposes of Line 7a. I don't think it is but some people I've asked seemed to think it does.
Sorry for the long question but the instructions are so vague it leaves everything to interpretation. It be interesting to see if I'm thinking on the same page as others.
I have had different RRSP accounts at various times over the past years. Assets have been transferred (tax-deferred) from one RRSP account to another on 4 occasions. I am wondering in regards to Line 7a and 7b on Form 8891, whether these types of transfers would be considered "Distributions received from the plan". Technically, i didn't receive anything because i didn't withdraw. these were transfers.
But in doing some research, it appears that the value entered on Form 8891 line 7a and 7b would be entered on Form 1040 line 16a and 16b. And the 1040 instructions discuss about rollovers from a qualified plan to another. it also refers to Pub 575 which mentions about a "direct rollover option" that sounds very much like the tax deferred transfer of RRSP assets from one account to another. so based on this, my understanding would be in a year that the RRSP assets were transferred, i would enter the transfer amount on Line 7a (as it was not taxable) and then enter $0.00 as the end of year balance on Line 8. And for the new RRSP (transferee), i would file a separate Form 8891 only disclosing the year end balance on Line 8 and not have to enter the contribution amount (from the old RRSP) on Line 9 because I would be electing to defer taxing so I can skip the rest of the form after Line 8.
For the new RRSP, my undertstanding is despite the assets being the same, would I have to make a new election on 8891 to defer taxing and not carryover the old deferral year from the previous account because these are different accounts?
Also, a side question regarding dividends reinvested in the plan. Would these be considered as "Distributions Received" for purposes of Line 7a. I don't think it is but some people I've asked seemed to think it does.
Sorry for the long question but the instructions are so vague it leaves everything to interpretation. It be interesting to see if I'm thinking on the same page as others.
By electing to defer income, you are not taxed on any internal earnings year by year. Transfers are not considered distributions, only money taken out of your RRSP portfolio is.
You never enter contribution amounts if you defer taxation. You track these yourself.
You never enter contribution amounts if you defer taxation. You track these yourself.
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
[quote="nelsona"]By electing to defer income, you are not taxed on any internal earnings year by year. Transfers are not considered distributions, only money taken out of your RRSP portfolio is.
You never enter contribution amounts if you defer taxation. You track these yourself.[/quote]
in the case of when the assets are transferred out of an RRSP to another one and the old RRSP account is closed, what would be the best way to fill out the form? for the end of year balance, should i enter $0.00 because the account was closed? this seems odd. or should i just enter the last balance before the account was closed and enclose a note indicating that the assets were transferred?
You never enter contribution amounts if you defer taxation. You track these yourself.[/quote]
in the case of when the assets are transferred out of an RRSP to another one and the old RRSP account is closed, what would be the best way to fill out the form? for the end of year balance, should i enter $0.00 because the account was closed? this seems odd. or should i just enter the last balance before the account was closed and enclose a note indicating that the assets were transferred?
On the 8891 for the first account you merely list the year-end value of zero. For the other you put the actual year-end value. There are no distributions to report. You can note that the first one is closed, transferred to the second.
8891 is not meant to track your taxable amount; it does not cover everything.
8891 is not meant to track your taxable amount; it does not cover everything.
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
This thread made me aware of form 8891 and I'm now filling them out from 2003 onward as well as 1040-X forms for the respective years.
I have Federal Taxes withheld every year on some US dividend reinvestment plans which I claim and get refunded when I file my US taxes. On form 1040-X I enter the withheld value on line 11. I don't see where I indicate that I've already had this amount refunded. If I carry through to the end, it seems like I'm claiming the withheld amount a second time. Can I enter the amount I've already had refunded as a negative value on line 17 - "Amount of tax paid with original return"?
I have Federal Taxes withheld every year on some US dividend reinvestment plans which I claim and get refunded when I file my US taxes. On form 1040-X I enter the withheld value on line 11. I don't see where I indicate that I've already had this amount refunded. If I carry through to the end, it seems like I'm claiming the withheld amount a second time. Can I enter the amount I've already had refunded as a negative value on line 17 - "Amount of tax paid with original return"?
There is no need to fill lines in your old 1040-X's. Just state that the 1040-X is being submitted for 8891 with no change to income credits or deductions.
But to your question, the original tax withheld has already been included in your tax payemnt line, just like your withholding from work. There should be no confusion on your part as to how this payment was treated; it's like any other overpayemnt.
But to your question, the original tax withheld has already been included in your tax payemnt line, just like your withholding from work. There should be no confusion on your part as to how this payment was treated; it's like any other overpayemnt.
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