Hi....I've learned a lot on this forum about my circumstance but I still have an outstanding question. I'm a US resident about to withdraw my Canadian RRSP and be subject to the 25% withdrawal tax. I understand that I have to pay US taxes on the amount that the RRSP has grown (over the cost base) since I moved to the US (5 years ago). But, my question is:
IS the 25% tax that is withheld in Canada only a foreign tax credit on my US return against the growth of the RRSP (i.e., the added foreign income)? Or, can the 25% withheld tax be used to offset my US income?
Any help would be very much appreciated. Thanks!
Reporting RRSP non-resident tax on US return
Moderator: Mark T Serbinski CA CPA
The 25% Cdn tax is only to be used as a credit against the US tax you pay on taxable portion of the RRSP (as calculated on form 1116), so it is typically quite a small ammount, unless you are in a very high tax bracket and you had exceptional growth in your RRSP.
You can conversely, use the tax as a deduction on your schedule A for the year.
Do it both ways and see which is bestter.
You can conversely, use the tax as a deduction on your schedule A for the year.
Do it both ways and see which is bestter.
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