RRSP Non-Resident Tax - Offset US taxes?

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jspade123
Posts: 5
Joined: Wed Feb 24, 2010 4:52 pm

RRSP Non-Resident Tax - Offset US taxes?

Post by jspade123 »

Hi

As a US resident.
If I incur the 25% RRSP Non-resident tax for a withdrawl, could that be used to offset US tax owing?

For simplicity let's assume there's no capital gain.
jewel
Posts: 16
Joined: Fri Apr 02, 2010 2:35 pm
Location: SF Bay Area

Post by jewel »

Hi,
I'm also intested in finding out more info on this. The Border guide suggests that a Foreign Tax Credit can be claimed in the US against it if you have other foreign income and I read on this board that isn't so because a RRSP is a retirement account.

I also read taht the RRSP withholding is not considered as foreign and that the Foreign Tax Credit could not be claimed against it, even if considering it as active income.
nelsona
Posts: 18675
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Any Cdn tax on RRSP withdrawls is claimable as a foreign tax credit using form 1116, as general income, not passive.

The problem is very little of the tax will be credited, siply because very little of the RRSP withdrawl is taxable in US.

If you were to have other genral income from canada (like a job from time to time), you could use the credit. It cnabe carried forward for 10 years.

The border guide position that RRSP income is passive applies only if one NEVER used form 8891 to defer income.
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
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