Dual Citizen with Canadian RRSP and T-Bills

khaos526 · Post by **khaos526** » Thu Jan 12, 2012 10:34 am

Ok this might be a bit confusing as I am totally confused. Back in the 90's I was in Canada and only a Canadian citizen when I started working. I had some money from an inheritance that was put into a RRSP account and then after working, I added money from my 3 years work in Canada into that. I also manged to get some T-Bills which are maturing soon. The whole account and things were taken care of by my dad so I had little knowledge of how it all worked or what my money went into and generally just forgot about it.

In the the late 90's I moved to the US on a TN status and my dad still took care of those Canadian retirement investments, I started to invest through my work here into the 401k. In 2007 I became a US citizen, at this point I have been putting money through work into a 401k, 457k and a Roth IRA.

Recently my dad decided I should start the transition of taking care of the RRSP and T-bills and such, most of which I never understood. However I never realized i needed to declare these on my US taxes (even though it seems the RRSP actually lost money and is about the same amount now as it was back in 1997 when I moved here).

Now I am being contacted by the bank in Canada about a T-Bill ($2,500) that is maturing very soon.

So I am totally at a loss of what I should be doing with all these Canadian retirement investment things. I have heard that I should have been filing a 8891 form with my 1040, but I am not sure if that is correct.

My best bet would be to just have all that Canadian money put into my US investments, however, I can't afford to pay all the taxes to take them out early to re-invest them here.

So do I leave the RRSP alone in Canada and just start the 8891 form this year? What about the T-Bill? Just let it mature and then cash it out and transfer the money to the US, declare that as US income and pay the taxes on that?

Sorry it's so messed up, but I'm just overwhelmed now that I'm having to take care of the Canadian retirement things and not a clue what I should be doing.

Thanks

nelsona · Post by **nelsona** » Thu Jan 12, 2012 12:51 pm

The RRSP, even if it is losing value, is generating taxable income., so you need to back-file 3 years of 8891. When you start taking it out, you will be taxed on the growth since you came to US, if you cannot determine that value, assume it is all taxable.

The T-bill is taxable when it comes due, only in US.

nelsona · Post by **nelsona** » Thu Jan 12, 2012 12:51 pm

And don't forget FBAR for the last 6 years if you did not do that.

khaos526 · Post by **khaos526** » Thu Jan 12, 2012 1:19 pm

[quote="nelsona"]And don't forget FBAR for the last 6 years if you did not do that.[/quote]

Ok for the 8891, a few questions:

I am not sure if I am a Beneficiaries or an Annuitants?

"Have you previously made an election under Article XVIII(7) of the U.S.-Canada income tax treaty to
defer U.S. income tax on the undistributed earnings of the plan?" is No, however it asks if I want it to be, since I really don't do anything with this RRSP should I check that box to say Yes?

Now for the Gains, I have no clue what these all are (Interest Income, Ordinary Dividends, Qualified dividends, Capital Gains or Other Income). All I know is I have a yearly balance and that is in from the from I get from Canada.

For the FBAR, this RRSP is my only account I have in Canada. I do not own any bank accounts anymore or anything. Do I still have to fill it out and put the RRSP on it?

Thanks for your input, I think I recall you from Grassmik's page over a decade ago always in the TN forum. Anyways at least this helps me figure get a guideline now of what to do, though I'm still so unaware of these things. I am just used to dealing with my W-2 each year and that is it...

nelsona · Post by **nelsona** » Thu Jan 12, 2012 5:44 pm

You are electing to defer, so on the earliest 8891, you will answer 'no' and make the election for that year.

Then on each of the others, you will indicate "yes" and refer back to that first year.

You don't fill in any income information except for year-end value, until a year when you take out income, in which case you simply put the gross nad net amounts.

You NEVER use any of the other lines,.

you ALWAYS treat yourself as beneficiary. ALWAYS.

khaos526 · Post by **khaos526** » Fri Jan 13, 2012 9:50 am

Ok that clears it up then. So figured out I actually have two RRSP accounts in Canada and that's all I have. So will there be any issues with the IRS in not reporting these two RRSP accounts? I know they are more concerned with going after the people who actually get money outside the US, but not sure how they view people who just didn't realize RRSP's were included in that?

nelsona · Post by **nelsona** » Fri Jan 13, 2012 9:56 am

What you just sid changes nothing form my answers; you have TWO 8891s to fill out.

khaos526 · Post by **khaos526** » Fri Jan 13, 2012 9:58 am

Oh and is there a part on the 1040 that I list the total of the Canadian accounts for the past year?

I see a 15a IRA distributions and a 21 Other Income, list type and amount

I don't see it being 21 as it's not really paid out income, but not sure where I mention the RRSP amount on the form.

Thanks

nelsona · Post by **nelsona** » Fri Jan 13, 2012 10:39 am

If you read the 8891, it tells you where to report RRSP income, and you only do this when you cash out funds OUT OF your RRSP.

Focus on preparing the 8891s for the past. Worrry about the 8891 and 1040 for the year you take money out when you actually take the money out --- later.

btw, I've covered how to fill 8891 many many times, so how about searching for it.

khaos526 · Post by **khaos526** » Fri Jan 13, 2012 2:27 pm

Ok cool, I got the information now I need. Will be filing a 1040x along with the 8891's from 2007 till 2010 and sending in the FBAR. Called up the Treasury Dept and they said it won't be an issue with an explanation. They mentioned this is happened a lot now and not to worry...