RRSP contributions are not tax-deductible on US tax return

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taxquestions
Posts: 8
Joined: Tue Dec 18, 2018 6:31 pm

RRSP contributions are not tax-deductible on US tax return

Post by taxquestions » Fri Sep 13, 2019 4:31 pm

RRSP contributions are only tax deductible on your US return if the RRSP contribution is made via employee contributions to an employer sponsored group RRSP plan.

If you make contributions to an RRSP as an employee or self-employed person and its not a "employer sponsored group RRSP plan" then its not tax deductible.

Im self-employed netting ~100k / yr and would like to contribute to my RRSP to lower my income, but it appears this wont be possible for my US return.

Is this correct?

nelsona
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Re: RRSP contributions are not tax-deductible on US tax return

Post by nelsona » Sat Sep 14, 2019 2:16 pm

You probably don't need to reduce your US tax, since you can use 2555 and 1116 to reduce your tax to zero even without any RRSP contribution.
Remember that you are not liable for SE tax portion in US, due to payimg into CPP in Canada.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

taxquestions
Posts: 8
Joined: Tue Dec 18, 2018 6:31 pm

Re: RRSP contributions are not tax-deductible on US tax return

Post by taxquestions » Sat Sep 14, 2019 5:30 pm

nelsona wrote:
> You probably don't need to reduce your US tax, since you can use 2555 and
> 1116 to reduce your tax to zero even without any RRSP contribution.
> Remember that you are not liable for SE tax portion in US, due to payimg
> into CPP in Canada.

I only use 1116 for FTC's (im not using 2555). I have about $5000 FTC's harvested from prior years (id like to keep this and use if I someday move to the USA and work there).

I have about $40,000 of unused RRSP room I can use.

If I net $100k and contribute $40k to my RRSP my Canadian return will show $60k and my US return $100k. I would have a net US tax owing in this situation.

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