Please read/post about RRSP in US Here!!!

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orillia4
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Post by orillia4 » Fri Mar 04, 2005 12:17 am

Question on amending returns... How far back can you ammend with respect to the RP 2002-23? I have read if you're amending your return because of a bad debt or worthless security, then you generally have seven years after the due date of the original return to file the amended return. Otherwise it's 3 years.

nelsona
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Post by nelsona » Fri Mar 04, 2005 12:40 am

When the Rev proc came out, it allowed amending back for 6 or 7 years.

<i>nelsona non grata</i>

andied
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Post by andied » Mon Mar 07, 2005 2:55 am

Three years ago, I used the information on the Twincities website to "roll up" past years RRSP deferrals, invoking the tax treaty and Rev Proc 89-45, without actually stating that the election was "rolled up."

As I read through this thread, I wonder if I should now use the Rev Proc 2002-23, to explicitly defer specific previous years.

nelsona
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Post by nelsona » Mon Mar 07, 2005 8:43 am

What did you do in subsequent years?

While 'roll-up' under 89-45 was suggested, it was not 'really' allowed. It was available under 02-23 however, and this came out in ... 2002.

Regardless of what you did 3 years ago, you should since 2002 have been using 02-23.



<i>nelsona non grata</i>

andied
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Post by andied » Mon Mar 07, 2005 1:31 pm

Since 2002, I have been using 02-23 to make the annual deferral. I made the "roll up" early in 2002, before 02-23 was available.

nelsona
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Post by nelsona » Mon Mar 07, 2005 2:37 pm

You are fine. You will indicate 2002 as the first tax year that you elected under 02-23.


<i>nelsona non grata</i>

chrisraye
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Post by chrisraye » Mon Mar 14, 2005 1:10 am

Hi there,

I am a Canadian citizen currently living in the US for the last 6 years and I have an RRSP that I've been filing Rev. Proc. 2002-23 for every year. Last year I decided to switch my RRSP from RBC to TD Waterhouse so that I can rebalance the portfolio and avoid the exorbitant fees RBC was charging me.

I was going to follow the transfer procedure that Nelson documented at
http://www.canadatotwincities.com/rrsp.html but since IRS form 8891 appears to be in effect for 2004, I am wondering how to document the transfer in the new world of the 8891.

Any advice would be appreciated...

nelsona
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Post by nelsona » Mon Mar 14, 2005 6:55 am

Form 8891 does away with the all 'statements' related to RP 02-23 including 'transferor' and 'tranferee' staements.

You will note that the 8891 advises that even if you transferred an RRSP, the election made on the old account(s) remains valid on the new one(s), and the year of first election remains the same as the original.

<i>nelsona non grata... and non pro</i>

chrisraye
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Post by chrisraye » Sat Mar 19, 2005 6:39 pm

Nelson,

As always, thanks for the advice...

worryfreeinvestor
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Post by worryfreeinvestor » Thu Mar 24, 2005 6:36 pm

<u>Real Return Bonds (RRBs) in RRSP</u>

I will move to California for a job in May. I know that California will tax my income within my RRSP, but (I think) that's ok because I'd have to invest it unsheltered in the US. Much of my RRSP is invested in Canada Real Return Bonds.

However, if I held Government of Canada RRBs outside my RRSP as a resident of Canada, it would cause a catastrophic tax-event because CRA taxes, annually, the phantom capital gain of the Consumer Price Index adjustment to the bond's principal, even though the investor does not realize the gain until the bond matures (in 2026 or whenever). I believe that the US IRS treats US Treasury Inflation Protected (TIPS) bonds the same way if held outside IRA, 401(k), 403(b) or other shelter by a US resident.

So, the question is, will California tax the phantom capital gain annually on my Canada RRBs in my RRSP? Does California even know what a Canada RRB is? (I do not believe that my RRSP brokerage statement reflects the CPI adjudment to the principal.)

nelsona
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Post by nelsona » Fri Mar 25, 2005 1:26 am

California will tax your RRSPs by their own rules, so probaly not.

Interestingly, if you held these bonds outside your RRSP, they would not be taxed in Canada at all, since cap gains for US residents aren't taxed in Canada, and Gov't bond interest is not taxable in Canada for US residents by treaty.



<i>nelsona non grata... and non pro</i>

dodgetx
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Post by dodgetx » Sun Mar 27, 2005 1:09 pm


Re: Foreign Tax deduction on RRSP gains upon collapse.

I've read 2 methods of claiming the tax deduction and wondering which is correct. The first claims the 25% witholding by canadian govt on gains while in the U.S(1040-line 16b) . The other, in order to avoid double taxation, dictates that it's the lesser between a)25% cdn withholding of 16b and b)the U.S. tax rate imposed on the 16b income.

I've been reading the forums and the 25% witholding seems to be the most popular however the latter method seems to be the most logical when one applies the intent of the deduction. In my case the rate was less than 25%.

Any comments would be appreciated.

TIA

nelsona
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Post by nelsona » Sun Mar 27, 2005 7:19 pm

Not sure what 2 options you've indicated.

The only 'two' options I know of are:

using 1116 to report to claim the 25% tax as a CREDIT,
You always report ALL of the 25%, and let the form determine what the most you can use is.

or

Using Schedule A and using the 25% tax (again, all of it) as a DEDUCTION.

Line 16b, in any event is always the same: post-arrival growth.

Most people try both ways and see what comes out lower for this year, and if it is the deduction, then decide if chosing the credit (which usually yields a carryforward) will be usable in the near future (ie. with other foreign wage/pension income)

<i>nelsona non grata... and non pro</i>

worryfreeinvestor
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Post by worryfreeinvestor » Mon Mar 28, 2005 2:14 pm

Thanks, that is great news, but again, given the cost of collapsing the RRSP, and the greater than zero risk of having to return to Canada, it is probably not a great idea to take them out of the RRSP. This takes some thinking about!

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote"><i>Originally posted by nelsona</i>

California will tax your RRSPs by their own rules, so probaly not.

Interestingly, if you held these bonds outside your RRSP, they would not be taxed in Canada at all, since cap gains for US residents aren't taxed in Canada, and Gov't bond interest is not taxable in Canada for US residents by treaty.



<i>nelsona non grata... and non pro</i>
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

nelsona
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Post by nelsona » Mon Mar 28, 2005 8:16 pm

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote">it is probably not a great idea to take them out of the RRSP.<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">

Probably not, but you could always make a like-value exchange from outside your RRSP

<i>nelsona non grata... and non pro</i>

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