matching RRSP deduction affected by yr of contribution, 8938

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ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

matching RRSP deduction affected by yr of contribution, 8938

Post by ND »

1. Can the XVIII(15) matching RRSP deduction be claimed for a non-commuter or ONLY for a commuter?
2. If said RRSP contribution was made entirely between Jan-March 2017 (claimed on the 2016 T1) can it be claimed on the 2016 1040 or must it only be claimed on the 2017 1040?
3. [unrelated to previous questions but for same taxpayer] The 8938 threshold for a taxpayer with SINGLE filing status living in the United States is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. For taxpayers living outside the United States it’s 200,000/300,000. Which threshold applies to the 2016 1040 of a USC who moved to Canada June 2016 and on his T1, his T1 paid preparer is filing him as a Canadian resident ? (per paid preparer - because he already set up an RRSP, got a Canadian driver’s license as a resident of Ontario and will be here for at least 2 years)
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

1. First off, only RRSP contributions made thru your employer-sponsored plan can be deducted on your 1040. Contributions made to a personal plan are not deductible. Doesn't matter where you lived at the time the payroll deductions were made.

2. Only contributions made thru the employer DURING the tax year are eligible.

3. If you resided in Canada on December 31, 2016 then the higher thresholds apply.

Question: Those initially moving to Canada cannot normally contribute to an RRSP during the first tax year. Are you sure you had contributionm room for 2016 tax return.

Make sure your 2016 Cdn return shows an arrival date on page 1. It should be the date you moved to Canada. You were a "newcomer" in 2016. The fact you set up an RRSP is meaningless. It is whether you lived in Canada or not that matters. You got an Ontario license because you live in Ontario, and not you arean Ontario resident because you got a license.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

Post by ND »

Thanks for reply.

RE "Only contributions made thru the employer DURING the tax year are eligible."

Can you please cite the source for this?

What blocks the argument from being made that the treaty allows on the US return the same matching RPP contribution as CRA allows on the T1 - and since CRA allows Jan-Mar 2017 contributions on 2016 T1, 1040 must also allow?

Tks for pointing out RRSP contribution room - there is existing room on CRA record, don't know the how/why.
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

How about the technical explanation of the protocol:

"The contributions and benefits must be attributable to those services and must be made or accrued during the period in which the U.S. citizen performs those services. Contributions will be deemed to have been made on the last day of the preceding taxable year if the payment is on account of such taxable year and is treated under U.S. law as a contribution made on the last day of the preceding taxable year".

In other words, the contributions need to occur and be attributable to the caledar year in which the WORK is performed, not later as a catch-up, for instance. So, it is by calendar year. That is how I interpret his explanation. Treasury wouldn't be making such a big deal of explaining how year-end contributions are treated, if year-end didn't mean anything.

Can I ask what situation would require your client to need this extra RRSP contribution as a deduction to his income in order to reduce US taxes? it is unusual for Cdn wage-earners to need much US tax relief, although given it was a moving year, they may be some difficulty matching up the FTC/FEIE.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Your client's RRSP contribution room for 2016 would have come about from previous life in Canada. If he never lived/worked in Canada before, then there would be no contribution room, and thus no deductible contribution for 2016.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
ND
Posts: 291
Joined: Thu Feb 21, 2013 5:28 pm

Post by ND »

Reply - you got it right in saying "given it was a moving year, they may be some difficulty matching up the FTC" and his US source income aside from W2 includes NY condo rental income.
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