Hey everyone,
I’m a US citizen living in Canada. I just turned my RRSP into a RRIF and need some help on how to report this income. I completed the required 8891 form every year until they were no longer required. From what I read, only the growth on this account is taxable in the US, is that correct?
If so, this might be a problem as I lost my records with my contribution history when I moved; I was tracking it from year to year. So do I just report the entire amount on the US side and take a foreign tax credit for what I pay to Canada?
I fear that CRA may have a problem with this. I have a US IRA that I pay tax on to the US and claim a foreign tax credit for on the Canadian side. If I claim the full amount of the RRIF withdrawal on the US side, will this not artificially increase my effective tax rate on the IRA and therefore I would be claiming more of a foreign tax credit on the Canadian side then I technically should be?
This is very confusing to me, please help.
RRIF 100% Taxable in US?
Moderator: Mark T Serbinski CA CPA
CRA won't have a problem. Regardless of what is contributing to your US tax rate, you are indeed paying tax on the IRA at that rate, and absent better record-keeping, you are required to report the whole amount . CRA will honor it.
As you correctly concluded, any contributions made to your RRSP that could not be deducted on your 1040 can later be taken from your RRSP/RRIF tax-free (you prorate the taxable and non-taxable portions year-by-year). You probably should try and figure out. That was the good thing about the old 89-45 statement which required you put the non-taxable amount year-by-year.
As an aside, I remind all those who get FTC on both sides of the border, that FTC calculations are done using the tax rates determined BEFORE applying the FTC on either return (but after applying FEIE form 2555 on 1040, if that is used)
As you correctly concluded, any contributions made to your RRSP that could not be deducted on your 1040 can later be taken from your RRSP/RRIF tax-free (you prorate the taxable and non-taxable portions year-by-year). You probably should try and figure out. That was the good thing about the old 89-45 statement which required you put the non-taxable amount year-by-year.
As an aside, I remind all those who get FTC on both sides of the border, that FTC calculations are done using the tax rates determined BEFORE applying the FTC on either return (but after applying FEIE form 2555 on 1040, if that is used)
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
Thanks so much!
Do you think CRA would be able to tell me how much I contributed to an RRSP over my lifetime? They track my contribution limit on my Notice of Assessment each year and might have these records on file?
If not, I suppose I can try to piece this info together with the remaining statements I have and by calling my advisor to see if he can get me statements for the years I'm missing.
Ok thanks for the tip on claiming foreign taxes. I was using the 2555, but I'm now retired.
Do you think CRA would be able to tell me how much I contributed to an RRSP over my lifetime? They track my contribution limit on my Notice of Assessment each year and might have these records on file?
If not, I suppose I can try to piece this info together with the remaining statements I have and by calling my advisor to see if he can get me statements for the years I'm missing.
Ok thanks for the tip on claiming foreign taxes. I was using the 2555, but I'm now retired.