RRSP Reporting

[1972rcs]

I started working in the US in September 2004 and was not aware, at the time, that I needed to report my RRSPs so did not complete form 8891. I am preparing my 2005 returns and will file form 8891. Will the fact that I failed to file form 8891 with my 2004 return present a problem?

Also I understand that form 8891 allows me to defer US income on undistributed earnings. I don't plan to use these funds until retirement age so when do I become liable for US tax?

Tks, Robin

[nelsona]

You should amend your 2004 return to add the 8891 form.

You will begin paying US tax on your RRSP when you begin withdrawing form them (or your RRIF if that is what is set up by then).

[Brenda]

Hi,

If you keep your rrsp's until you retire in the US, I realize you have to pay US taxes on them, however, will you also have to pay Canadian taxes?

thanks

[nelsona]

Of course, as a non-resident, living in US, you wil be subject to 25% flat tax on lump-sums, and 15% on periodic RRIF withdrawals.

[Rickerbucks]

nelsona: if you with draw from an RSP / RIF whilst living in the US, is that added to your US income for tax purposes? I thought there was a flat tax of 25% to Canada and that was the end of it.

[nelsona]

Income is income. The treaty even states specifically that the US cab treat any pension income from canada as pension income in US. Thankfully, the uS allows for a cost basis to be determined for RRSPs (not pensions) which can greatly reduce the taxable income.

If you live in US (and even if you are a uS citizen living outside US), you have to report all income, regardless of source, and regardless if it is taxed elsewhere. This is the same rules apply to Cdn residents.

The remedy to prevent double-taxation is by invoking foreign tax credits, using the tax paid in Canada to partially reduce the tax in US